ISS and HSF Seminar, Report: Oil and Gas Discoveries in Kenya and the Region: Opportunities and Challenges
Date: 2012-11-06
Venue: , Institute for Security Studies , Nairobi Office
, Conference Room
, Braeside Gardens
, Lavington
Gitanga Off Muthangari Road
, Nairobi
,
Kenya
ISS and Hanns Seidel
Foundation Seminar, Nairobi
Oil and Gas Discoveries in Kenya and the
Region: Opportunities and Challenges
Organised by the Institute for Security Studies,
Nairobi and Hanns Seidel Foundation
Date: Tuesday 6 November 2012, Nairobi, Kenya
Seminar Context
East Africa
is increasingly developing into an important hydrocarbon region. With proven
reservoirs and heightened exploration activity, the region is raising hopes of
an oil boom and the attendant profits. In ideal circumstances, the oil and gas
resources in Kenya and the region should form engines
of stability, economic growth and improved governance. Looking at experiences elsewhere
on the continent, however, there is the danger of the ‘resource curse’
syndrome, which counsels about the perils of hydrocarbons turning into sources
of instability and ecological catastrophe. Indeed, the dismal track record of
Africa’s oil producers has led to concerns about the possibility of Kenya and the
greater region bearing Africa’s paradox of plenty. Already, there are
emerging concerns about territorial disputes in Kenya and the region linked to
the discovery of natural resources.
As Kenya
in particular draws increasing interest from major oil
companies, the question is, what are the short- and medium-term
projections for oil and gas discoveries and what is
the geostrategic implications? Significantly, what policy options should Kenya
pursue to avoid past development failures associated with petroleum and militate
against potential conflict? This seminar sought to examine these questions,
among others, with the aim of offering policy recommendations to improve the outcomes of oil and gas production in Kenya
and the region.
The seminar began with
introductory remarks from the Chair, Kisiangani Emmanuel, who then welcomed the
Acting Nairobi Office Director, Tsegaye Baffa. Both welcomed participants and underscored
the ISS’s intention to provide a platform for dialogue
with the aim of mainstreaming research-based perspectives on public policy
processes in Kenya and the region. They also pointed out the increasing
interest in extractive industries in the region and
the need to put in place mechanisms that would lead to the best use of these
natural resources. Tsegaye then thanked the Hanns Seidel Foundation
(HSF) for supporting the seminar and invited the HSF director, Markus Baldus,
to make a few brief remarks. Markus highlighted the history of the HSF and its working
relationship with the ISS, aimed at strengthening human security through research and
policy development in the Kenya.
Presentations
The
first presenter, Ms Wanjiku Manyara, spoke on ‘Oil and gas discoveries in
Kenya’. She began by highlighting the current status of oil and gas exploration
in East Africa, which has about 28 prospective sedimentary basins. She noted
that to date over 37 international oil and gas companies are licensed in the
region and that an estimated 3.5 billion barrels of oil and 3 trillion cubic
feet of natural gas have so far been discovered in the East African region (oil
in Uganda and Kenya and natural gas in Tanzania). The implications of these discoveries
include the improvement of the region’s profile due to the commercial viability
of these resources, the opportunity to develop sound oil and gas policies, economic
growth and development as a result of the region’s transformation into an
exporter of oil and gas, capacity building in terms of technical training of
oil experts, and infrastructure development and enhancement.
The
speaker emphasised that if Kenya wanted to avoid the ‘resource curse’ syndrome,
the government and stakeholders should develop sound policies to guide the
formulation of new legal, regulatory and institutional frameworks. This, she
said, should entail ensuring transparency and accountability, as these are the
key factors that greatly influence proper governance and fair distribution of
natural resource proceeds. The opposite results in corruption, skewed
distribution of oil and gas proceeds, conflict and a circle of poverty. Ms
Wanjiku noted that it was critical for governments to recognise that natural
resources were public assets that belonged to and should be used for the
benefit of the citizenry rather than ‘goods’ that should be used at the government’s
discretion.
The
speaker emphasised the need for the Kenyan government to develop sound
industrial, labour, market, trade and exchange policies in order to avoid the
‘Dutch disease’, which results in communities abandoning other lines of
production to join the oil industry. In conclusion, Ms Wanjiku observed that political
will was key to ensuring that a country’s natural resources became a tool for
national economic empowerment through well thought-out and comprehensive
policies. However, she noted that countries in the region that were in still in
the initial stages of Extractive Industries Transparency Initiative (EITI)
needed technical and financial support to strengthen their capacities.
The
second presenter, Mr Joseph K Kurauka, spoke on the ‘Community development and environmental
aspects’ of oil and gas discoveries. He noted that over the last two decades,
there have been a number of factors that contributed to the increasing
importance of Africa as a source of energy for the United States and Western
Europe. These, he observed, included increasing turmoil in the Middle East and the
ascendency of nationalist governments in Central and South America. In addition,
the traditional destinations for Africa’s oil are now facing increasing
competition for supply from the rapidly growing economies of China and India. He
added that the benefit for Africa has been the upsurge in oil prices that has
created an inflow of petrol dollars into Africa’s oil-producing economies.
Mr Kurauka described the resource curse as ‘the
inverse association between development and natural resource abundance’. He said
this was a situation whereby natural resources such as oil generated large
revenues for governments but paradoxically the outcome was economic stagnation
and political instability. Evidence shows that in many of the net oil-exporting
countries (in Africa and elsewhere) it has been a major source of economic,
social, political and environmental problems, rather than a benefit. He alluded
to studies that point out that petroleum, in particular, brought trouble:
waste, corruption, consumption, debt overhang, deterioration, disintegration of
public services and conflict.
With
regard to the environmental challenges, the speaker said that soil and water
pollution from oil spills may result in the long-term degradation of the
environment and cited the example of oil production in the Niger Delta region, where
oil has done great harm to both the people and the ecosystem. He added that
waste and wastewater disposal, air and dust emissions, noise pollution, changes
in aquatic floral composition, terrestrial habitat destruction, risks and
hazards, land compensation, conflict over the distribution of oil benefits, and
the risk of STD/HIV/AIDS were all environmental challenges brought about by the
exploration of oil and gas resources.
Mr Kurauka emphasised the importance of developing
measures to mitigate environmental challenges. Some of the measures he
suggested were conducting Environmental Impact Assessment surveys that
included social impact assessments, insisting that oil-producing companies develop
sound environmental management plans,
and the government developing environmental monitoring plans as well. He
pointed out the need to have a budget from which funds were allocated towards mitigating
all the negative environmental impacts. The speaker concluded by advising all
stakeholders to incorporate lessons learnt from other African states that have
sustainably benefitted from the proper management of oil and gas resources, and
stressed the need to engage all
stakeholders before exploiting natural resources.
The last presenter, Mr Eliud Omeri Idoket, spoke
about the oil discovery in Turkana, Kenya. He began his
presentation with an overview of Turkana county, observing that it was a hot and dry area prone to famine and cattle rustling.
It is one of the most marginalised and underdeveloped areas in Kenya with a
poverty index of 98%. According to the speaker, the challenges faced by the
Turkana people as a result of oil exploration include the influx of people
buying land, the side-lining of the local Turkana County Council by the national
government in decision-making related to oil exploration, lack of sensitisation
of the local community regarding oil exploration and its effect on livestock
grazing zones, and the displacement of households by investors with no form of
compensation to the affected families. He added that the Turkana County Council
had not been paid the exploration land fee and of concern too was the fact that
out of 500 people hired to do the exploration, only 40 were locals. He
underscored the need to conduct an audit of the human resource needs of
exploration companies and adopt clear laws and guidelines on employment.
Mr
Omeri observed that despite the anticipated economic gains suggested by the
previous speakers, the Turkana community was apprehensive about any
improvements in their lives. He affirmed the need for Turkana people to be
consulted on all oil exploration processes including tendering processes,
environmental conservation strategies, production sharing agreements (PSAs) and
revenue sharing arrangements, to remove any mistrust and suspicion among local
communities. The speaker indicated that joint forums held with stakeholders in
the Turkana community have highlighted the need for the community to understand
Kenya’s laws, international laws, existing policies and best practices of
natural resource exploration. He added that victims of accidents caused by the
oil companies have so far not been compensated and that Kenya should sign on
EITI to strengthen its weak laws on natural resource exploration. He described
the weak governance structures at both county and national level as an
impediment to the development of the Turkana people and proposed that local
communities be informed of their share of proceeds from the oil revenue. He
concluded by revisiting the issue of community land rights, saying they needed
to be determined in a transparent manner during contract negotiations for oil
exploration to avoid disputes in future.
During this session a number of issues were raised.
These included the need for the Turkana community to moderate their expectations
regarding oil revenues since these would be shared with the rest of the country.
It was also noted that the community needed to be cautious of politicians who
heightened expectations, as this could lay grounds for conflict. One speaker
observed that the constitution needed to be used as a guideline for sharing oil
revenue and that the devolved system of government would benefit the Turkana
community only if the community held its county leaders accountable. One
participant raised the issue of how fair play would be achieved among the
different stakeholders, to which respondents observed that the production-sharing
commitment was still under review and that when finalised, it would help all
parties to come to an agreement. It was also reiterated that clear and properly
considered policies were the solution to concerns on fairness and equitability.
On the challenges relating to the implementation of policies, speakers
underscored the need for civil society organisations and citizens to resort to
advocacy and ensure that the policies are effectively implemented. On a
question related to the need to effect environmental compensation, the speakers
agreed that people’s land, livestock and water, if affected by the exploration,
should be compensated and that this needed to include agreements with local
communities and in policy frameworks. The ISS was thanked for organising this seminar
and the speakers called for more such events, given their relevance to some of
the immediate challenges facing the country.
Seminar Schedule
Chairperson: Dr Emmanuel Kisiangani,
Senior Researcher, ISS
Speakers:
- Wanjiku Manyara, General Manager of Petroleum Institute of East Africa
(PIEA)
- Joseph Kathiai Kurauka, School of Environmental Studies, Kenyatta University
- Eliud Omeri, Director, Turkana Development Initiatives
Report by Mashaka
Lewela