On March 26th 2012, President Mwai Kibaki triumphantly announced that oil has been discovered in Kenya for the first time.

While commercial viability of the oil find in the northwest Turkana region is still uncertain, Kibaki welcomed the news, calling it “a major breakthrough”.

“This is the first time Kenya has made such a discovery and it is very good news for our country,” Kibaki said.

“It is, however, the beginning of a long journey to make our country an oil producer, which typically takes in excess of three years.”

About the oil discovery

The oil discovered in northwest Kenya is considered to be high-quality oil that will yield more gasoline and diesel per barrel than some other crude discoveries in Africa.

The Ngamia well was drilled to 1,041 metres and will now be drilled to about 2,700 metres, a process that will be completed in May 2012.

Tullow Oil, which is carrying out oil exploration in the region and has a 50 per cent interest in multiple sites in Kenya and Ethiopia, said that 20 metres of net oil pay was discovered at a site called Ngamia-1 in Kenya’s Turkana County.

The type of oil found in the Ngamia, light and waxy, has a low density and flows freely at room temperature. Light crude is more valuable than heavy crude.

The oil find is near the border with Uganda and South Sudan. Both of those countries have oil industries.

What can Kenya learn from the experiences of other African oil producers

It seems though that oil finds in Africa do not always deliver the expected blessing.

Sudan and South Sudan have been warring for years over land and oil, even after South Sudan ceded from its northern neighbour. On 27th March 2012 Sudan’s President Bashir suspended peace talks after border clashes between the 2 armies. Many in Sudan consider oil a “curse” for the conflicts and exploitation they said it brings to the region.

Uganda discovered oil a few years ago however the discovery has sunk this tiny nation into a litany of controversy and scandals.

Then there’s Nigeria – Africa’s leading oil producer, infamous for its oil wars and a cautionary example of the oil curse’s destructive impact. When it became independent in 1960, Nigeria had a level of development that was often compared to that of Thailand or Malaysia. It was the breadbasket of West Africa with a vibrant manufacturing industry. But an overemphasis on the oil sector, as well as widespread corruption, starved other parts of the economy. Now Nigeria imports food and gasoline, its manufacturing sector is mostly moribund and it has fallen almost to the bottom of most development indexes.

In December 2011 Nigerians woke up to news of government scrapping their fuel subsidies. The resulting clashes and protests were highly vocal and encouraging from a free speech perspective and confirmed what we already knew – oil, and the wealth it brings has led to a history of corruption on the part of the few in power while most Nigerians languish in poverty with lack of access to water, roads, quality education and basic requirements.

While there were other plausible arguments against the subsidies but one might as well ask: Why is Nigeria still struggling to provide its people with the most basic utilities like water, so many years after the discovery and production of its oil?

Lessons for Kenya’s nascent oil industry:

To avoid Nigeria’s and Sudan’s oil troubles, here are some lessons the East African nation could consider:

  • The Kenyan Government should avoid any covert and shady approaches in its oil sector dealings and immediately become transparent in all its dealings with the Ngamia oil find. The Kenya government should consider setting up a facebook page and/or website to communicate with Kenyans about the unfolding of this development. Nigeria’s politicians and power brokers in the oil sector seem to have thrived in an environment devoid of transparency. This covert approach to the management of the country’s oil sector has drawn Nigerians’ ire towards their own government, which is primarily charged with transacting business.
  • Kenya should also move fast to put in place clear laws and benchmarks for the oil sector and establish public and private institutions to control this lucrative sector.
  • By all means, Kenya should avoid militarization, tribalism or heavy handed politics to control oil revenue, as these have led to coups, political instability and unknown suffering for the innocent caught in the midst of war in other countries.
  • Kenya should not forget its already successful economic sectors such as tourism and cash crops such as coffee, tea and flowers. By equally supporting all industries and encouraging manufacturing, farming, and even technological innovation, Kenya will ensure it has a well rounded and robust economy, now and into the future.
  • Kenya ought to consider privatising the production of this oil or adopt an open, profit share policy with the people of Kenya. In Nigeria, where oil belonged to the state, holding public office became the route to riches. This confluence of the militarization of political life and the arrival of oil riches fostered a dysfunctional political economy that has endured.

Kenya has the opportunity here to secure a future for it people if its leaders focus on increased transparency in the conduct of their national oil companies and the establishment of mechanisms by which the entire population – including immigrants and guest workers – would benefit from resource revenue over the long term.

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References:

Kenya discovers first ‘major’ oil deposit- AlJazeera.com

Nigeria and the lessons of oil – http://www.businessdayonline.com

About The Author

Afritorial

Neva is a storyteller and media strategist with a background in PR, film, advertising and digital marketing who is passionate about technology, new media and the endless possibilities of the social and mobile sphere. Read more about her on our 'About Us' page.

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