Published On: Sat, Jul 28th, 2018

Turkana traders count losses after Tullow Oil suspends work

Tullow Oil has stopped work at its Kenyan oilfield and halted trucking operations due to security issues, the firm’s chief executive Paul McDade told Reuters yesterday.

Australian-owned mining firm Base Titanium also announced it has suspended exploration activities in parts of Kwale County to resolve community issues.

Tullow had on Tuesday last week threatened to suspend activities in Turkana within two weeks if the impasse with the local community is not resolved.

“What you saw locally were the local people, the community using the trucking operation as a lever really to demonstrate to the national government that the security situation on the ground had to improve,” McDade told Reuters.

The British firm is aiming for a final investment decision on its $2.9 billion (Sh290 billion) Kenya project in late 2019, which would open up the country’s oil industry to exports.

“The current inventory estimates essential supplies necessary to run Kapese operation base will run out in the next 14 days after which we will have no option other than a complete shut-down of the camp,’’ Tullow Oil Kenya managing director Martin Mbogo said.

The temporary closure comes just seven weeks after President Uhuru Kenyatta flagged off first four trucks loaded with crude oil from Ngamia 8, in the Turkana oil fields as part of the Early Oil Pilot Scheme (EOPS).

The EOPS had been postponed since June 2017 due to disputes over revenue sharing mechanism between national government, county and community.

The local community was demanding for 10 per cent of revenues up from five per cent that had been proposed by the government.

President Uhuru Kenyatta however in late May managed to strike a deal with local leaders who agreed to a revenue sharing ratio of 75:20:5 for national government, county and local community respectively.

During the launch of the EOPS, Uhuru issued a shoot to kill order on perpetrators of cattle rustling, a key security concern in the region.

On June 28, locals stopped five trucks from ferrying crude oil to Mombasa over rising insecurity along the border with Baringo.

The trucks that were accompanied by armoured police vehicles were stopped at Kalemngorock Centre along the Lokichar-Kapenguria road by hundreds of residents who allowed other vehicles to pass.

On Monday, Petroleum Cabinet Secretary John Munyes said the government had lost Sh400 million in two weeks following protests that have slowed Tullow’s activities.

“We are really urging the residents of Turkana to stop blocking the transportation because that is not helping in any way. Oil is a national resource and it cannot benefit any of us unless Tullow is allowed to go on with its operations,” Munyes said.

On the Base Titanium standoff with the local community, External Affairs manager Simon said the new exploration phase had managed 270 holes for 3,835 metres before the drilling was put on hold.

‘’Completion of the remaining drilling programme of 4200 metres in this area is currently on hold whilst community access issues are being resolved,’’ said Wall when he released firm’s second quarter report .

In May, Msambweni residents rejected requests by Munyes to support the exploration, saying mining had brought more problems than blessings.

Led by Lunga Lunga MP Khattib Mwashetani, they said mining would displace them yet only a few would benefit. Base Titanium, which has been operating in Kenya for the past four years, last year contributed Sh13.3 billion or nearly 60 per cent of the mining sector contribution to the Gross Domestic Product (GDP), up from 43 per cent in 2014 and 54 per cent in 2015.

Experts want the government to mitigate conflicts in the country’s mineral rich areas, saying perennial community conflicts especially on revenue sharing may scare investors.

In their study published last year dubbed ‘Conflicts in Kenya’s mining cycle’, Seroni Anyona and Benard Rop said that such rows can be resolved with effective public participation programmes especially on revenue sharing.

NairobiStar

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Turkana traders count losses after Tullow Oil suspends work
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