Energy leaders’ insight on future of Kenya’s oil, gas transition
…Advised African governments to consider long-term effects of COVID-19 on oil and gas projects
Africa Oil & Power and the Africa Energy Chamber have identified Kenya to possess the most natural resources in East Africa and the most explored country in the region.
The disclosure was made during a webinar hosted by the Africa Oil & Power and the Africa Energy Chamber on Thursday themed ‘Moving Kenya Forward: Oil Production and New Exploration Under COVID-19.’
Industry leaders at the event shared strategies and thoughts on how Kenya’s oil and gas sector could deal with the implications caused by COVID-19.
Kenya’s oil and gas industry is in a state of transition, as its major oil and gas development — Blocks 10BB and 13T in Turkana — has been put on hold, with Tullow Oil submitting a notice of force majeure to the Kenyan Ministry of Petroleum and Mining, citing complications from COVID-19.
However, Uganda’s Lake Albert Project is moving ahead, with Total announcing plans to acquire Tullow Oil’s stake in the project. The massive development in Uganda, which is set to include a pipeline and refinery, could easily have an impact on regional oil and gas developments and opportunities.
According to Dr. Elly Karuhanga, “Force majeures are reactive for companies; it is something that is beyond their means or the problem they are facing. So, it is unfortunate that this has happened in Kenya, but it is also unfortunate that Tullow had to exercise this in their business. When you think about the reasons they faced, they had no alternative.”
In East Africa, Kenya has the most natural resources and is the most explored country in the region. In To have a knock-on effect and attract investors in this climate, East African countries need to keep exploring and looking at other projects, industry experts have said. In Kenya, there are offshore blocks operated by Eni and hopefully with a great oil flow they will help the economy.
For companies like Baker Hughes, transition into deep-water explorations is expected to be less difficult, because it is already involved in offshore projects across Africa and has actively interacted with Eni in Kenya.
“For us it is more about, how do we get our local partners in Kenya who have been involved in the onshore activities, to then up their game a little bit to meet the offshore requirements and that’s going to take a lot of back and forth, integration, cooperation to get them to a point where the skillset of that personnel and the equipment that they have and intend to acquire will be able to meet the requirements of deep-water play,” said Toks Azeez, Sales and Commercial Director for Sub Saharan Africa, Baker Hughes.
Speakers encouraged synergies and regional collaboration to overcome the challenges faced by the oil and gas industry. Local companies as well as countries need to come together to find a solution to them. According to Mwendia Nyaga, Chief Finance Officer of Oilfield Movers. “Companies can scale up from the location at which they are based and start working in other places. For me it is cooperation, synergizing and not over complication.”
African governments are advised to think about the long-term effects COVID-19 has on oil and gas projects as well as how to regain investors’ appetite, “You should always look at fiscal incentives that allow fair and equitable taxation on revenues, but allow an investment environment that is lucrative, because every dollar in our industry can go anywhere in the world.
“East Africa, big companies and the small-medium sized oil and gas companies, will look at the investment climate as to where they get greater bang for their buck and that will mean that if the East African region does not have favorable fiscals then the dollars will go elsewhere, where you will get better bang for your buck, so there is a balance.
“When government is looking at this to be able to enable an environment where investment will be made, knowing that the risk is carried by the investors initially,” said Brian Muriuki, Managing Director & Country Chair of Royal Dutch Shell Ghana.
The Chief Operating Officer of Energy Solutions Africa, Doris Mwirigi, believes that the oil and gas industry is in a transition, seeing that oil prices are slowly recovering to pre-COVID-19 prices.
“In Kenya, we are already at the forefront in terms of green energy and if you look at it, we are still very dependent of fossil fuels. So, you find that we are ahead in terms of green energy, however, I am still an oil girl and believe that oil and gas will recover, and in any case as you can see globally, the oil prices are coming up and if you look at the equity market, the oil prices are good for oil companies. So, I think oil and gas will still play a major role in the energy mix and we will be here,” she said.
Also, Mwirigi spoke on the involvement of women and how the EqualBy30 initiative will empower more women in the oil and gas sector, “When you talk about adding women, it should not be just about diversity, but a business decision because companies headed by women do better. So, it’s not even a cry for help or diversity but business sense,” Mwirigi said.
The Kenya webinar featured Hon. Dr. Elly Karuhanga, Chairman of the Uganda Chamber of Mines & Petroleum & Chairman, Private Sector Foundation Uganda; Doris Mwirigi, Chief Operating Officer of Energy Solutions Africa; Toks Azeez, Sales and Commercial Director for Sub Saharan Africa, Baker Hughes; Mwendia Nyaga, Chief Finance Officer of Oilfield Movers and Brian Muriuki, Managing Director & Country Chair of Royal Dutch Shell Ghana.