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Thursday, May 26, 2022

Fuel Crisis: Why Turkana’s 317 Billion Litres of Oil Are Not Helping

  • The country has been crippled by the fuel crisis that has affected motorists in the past three weeks. 

    This has led to filing stations running out of fuel, with some closing down over the crisis. 

    The situation has become worse despite the government’s efforts in trying to mitigate the situation such as President Uhuru Kenyatta signing the Supplementary Budget that allocated Ksh34.4 billion to the oil marketers and an additional 100 million litres of super petrol docking at Mombasa port last weekend. 

    President Uhuru Kenyatta flags off Kenya’s first crude oil from the Turkana oil fields on Sunday, June 3, 2018.

    As a result of the crisis, questions arose over the presence of oil in the country, especially in Turkana county. The county holds an estimated 2.85 billion barrels of oil reserves (about 317 billion litres), and to date, more than 80 per cent of the oil is inaccessible to thousands of motorists who are in need of the commodity. 

    A previous report by the British oil firm, Tullow, revealed that the reserve remains inaccessible due to limitations of extraction technology.

    Tullow owns 50 per cent operated interest in a number of blocks of the oil site based in South Lokichar, Turkana County. In 2012, the company discovered over 1 billion barrels of crude oil at the site. 

    “The 2.85 billion barrels is what is called “oil in placeâ€, it is not reserved; what’s key is how much can be recovered and the number of 585 million barrels is comparable to other onshore oil fields around the world,†part of the report. 

    The oil firm has in the past detailed that in order for the country to capitalise on the barrels of oil, a whopping Ksh373 billion is needed to set up a crude pipeline and processing facilities for the oil fields.

    At the current global price of Ksh8,716 per barrel, the potential crude oil amounts to an average of Ksh23.66 trillion. 

    According to the 2021 annual report by Tullow, the firm noted that the future of the programme was dependent upon acquiring a strategic investor.

    “Failure to secure a strategic partner would impact our ability to progress the Kenya project to final investment decision and unlock value. 

    “Discussions are underway with potential bidders around a range of commercial arrangements.”

    If the firm is successful in finding a partner, it would be able to proceed with the multibillion project that has since become a nationwide conversation. 

    The government is now pressuring Tullow to present a comprehensive investment plan in carrying out the programme. 

    An oil well at Ngamia 1 in Turkana County.
    An oil well at Ngamia 1 in Turkana County.

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