Protests a threat to Tullow project

Tullow Oil may shut down operations in northern Kenya in two weeks unless persistent issues with local residents, which threaten progress of the project, are resolved.

Disruptions in the remote Turkana region have halted the shipments of a pilot programme to test early production and deliver oil from Lokichar to the port of Mombasa 1,000km away, for future export.

Tullow, along with partners Africa Oil and Total, plans to make a final investment decision in 2019 to ramp up production by 2021 and develop a pipeline to ultimately transport the estimated 560-million barrel resource.

Tullow has enough supplies to run its Kapese Integrated Operation Base for another 14 days, “after which we will have no option other than a complete shutdown of the camp”, the company said. “This will further delay resumption of crude oil trucking by about two months.”

Kenya’s recent celebration of the first oil shipments, a milestone since Tullow’s discoveries in 2012, has been short lived.

Aggrieved local community members seized trucks transporting crude on June 28 and broke into Tullow’s Ngamia 8 oil well and storage site, protesting against rampant insecurity in Turkana county. Kenyan MPs have linked the protests to local residents having their share of oil revenue halved to 5% by the government and demands for jobs and business opportunities such as supply tenders.

The companies and both local and national governments need to resolve the issue of equitable distribution of revenue from the oil or they may face more public discontent, according to Ahmed Salim, an analyst with Teneo Intelligence.

“Until they get that right, this is going to be something that’s going to disrupt Turkana and it’s going to disrupt Tullow Oil for the foreseeable future,” he said.

Tullow encountered protests as early as 2013 in Kenya over a demand for jobs and benefits when the company was on a drilling schedule. Exploration director Angus McCoss at the time said the action was a “good wake-up call” to be more aware of local needs.

The National Bureau of Statistics ranks Turkana as the poorest of Kenya’s 47 counties.

The government is working with the community to resolve the impasse, petroleum principal secretary Andrew Kamau said. He declined to give any estimate for how long that would take.

The local community wanted to decide how to spend their 5% share of oil revenue, James Lomenen, an MP for Turkana South, said. “Their argument is that you can’t build infrastructure where people are struggling to meet daily basic needs; it would be of no use,” he said. “These are people who can’t even afford a meal.”

From miners to oil explorers, companies needed to maintain strong ties with the national government and local communities, Salim said. “Once things get moving, I think the shift in focus will go back to the fact that oil and gas is a profitable business and Turkana is one of the poorest counties in the country.”

Tullow shares fell 1.8% before trading unchanged at 218.2p in London.

KENYA’S RECENT CELEBRATION OF THE FIRST OIL SHIPMENTS … HAS BEEN SHORT LIVED