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East Africa’s newcomers in the African oil industry – Kenya and Uganda – are in a race to become the region’s topmost oil-exporting country. The prospect of developing oil production in both countries boosts hopes of increased revenues and job creation.

Last week, Nairobi signed an agreement with oil multinationals which could see the country attract up to $3 billion funding to develop its Turkana petroleum deposits. The funds are to be spent on the construction of an oil pipeline to Lamu as well as the development of drilling and storage facilities.

As confirmed by Petroleum Principal Secretary, Andrew Kamau, the information memorandum was finalized by the country’s petroleum ministry officials in London and is expected to be marketed to global financiers who see the Turkana oil project as a viable investment option.

“We have agreed on the project information memorandum that allows us to do market sounding, which is going to the market to source for funds,” Kamau told The East African in an interview. “The memorandum is being shared with banks… We are looking at 10 banks, both local and international.”

The latest memorandum comes on the back of a June deal Kenya signed with the joint venture partners involved in the Turkana project – British oil major Tullow, France’s Total and Canadian firm Africa Oil.

The agreement reportedly lays out the obligations of each party and investments required for commercial production. And in August, Kenya shipped over 2o0,000 barrels of early oil exports, which earned the country $12 million.

With the information memorandum, Kenya is a step closer to signing the Final Investment Decision (FID) on the oil project. The FID is the ultimate step in the journey to 2023 or 2024 when drilling and commercial production is expected.  Kenya plans to commence commercial exports of between 60,000 to 80,000 barrels of crude per day in the next four to five years.

While Nairobi has recorded significant progress since discovering the natural resource, Kampala finds itself at a standstill after a tax dispute with multinational oil companies – Tullow, Total and China National Offshore Oil Company (CNOOC) – resulted in a stake deal collapse.

Uganda, which had a commercial production target of 2022, has seen all production and export infrastructure projects put on hold. However, the oil companies have proposed fresh dialogue to resolve the standoff with the government and are reported to be keen to resume operations.

Meanwhile, Nairobi is gaining momentum and potentially ahead in the race to the international oil market despite discovering its crude deposits six years later than Kampala.

Kenya’s crude reserves, discovered in 2012, are estimated at 500 million barrels, with about 400 million considered recoverable. Meanwhile, Uganda hit its oil deposits in 2006 with proven reserves of 6.5 billion barrels, about 2.2 billion of which is recoverable.


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