There’s no rush to auction new oil blocks – state
Petroleum PS says the government is not in charity business and wants to get more data. The companies that acquire the blocks should pay some fees
The Ministry of Energy and Petroleum says it will not rush the auction of the 17 new oil exploration blocks it created recently despite rising interest from investors.
Petroleum Principal Secretary Andrew Kamau says the blocks will in future be sold at the right price and to the right investor.
“Unfortunately, what we are seeing in a low-priced environment is people come, they get blocks for their own reasons and we don’t get the data that we want,” Kamau said. “We are not in any rush to give out any blocks because it does not meet our strategic intent as a country at the moment.”
Interest in Kenya’s oil block has been on the rise since February 2012 when British explorer Tullow Oil and its then equal partner African Oil of Canada struck oil in block 10BB in Lokichar Basin, south of Turkana county.
Africa Oil has since farmed out half of its stake in oil-rich blocks 10B and 13T to Danish business conglomerate Maersk. The Lokichar Basin has recoverable reserves in the upwards of 750 million barrels.
“It is not a must that we give out blocks, we don’t have to. The reason is because we would like to get more and more data,” Kamau said. “We would also like companies that get these blocks to do some work, pay some fees ... and give us some data.”
The cost of the blocks depends on the level of exploration, including the data available and wells sunk.
The creation of new blocks brings the country’s tally to 63 blocks for exploration.
Civil society groups – Oxfam Kenya and Kenya Civil Society Platform on Oil and Gas – in April called for an audit of 27 multinationals with stakes in Kenya’s 41 petroleum blocks.
They said about 20 of the firms own the blocks through subsidiaries in tax-haven or low-tax jurisdictions.
“What happens is that the subsidiaries in the tax havens are used as vehicles to transfer costs to Kenya,” KCSPOG coordinator Charles Wanguhu said at a briefing on April 1.
Petroleum Principal Secretary Andrew Kamau at the Tullow Oil briefing in Nairobi last Friday