The Ministry of Energy and Petroleum has started developing a resettlement and compensation plan for people displaced by the construction of an oil pipeline from Turkana to Lamu, ahead of the planned commercial exploitation of Kenya’s oil reserves.
The resulting legal framework will guide engagements between the government, communities and oil firms when there is a need for compulsory acquisition of land for pipeline development.
The ministry is now seeking a consultant to guide the development of the plan. The terms of reference for the consultancy work, dated February 18, says the consultant will be engaged for six months from the effective date of signing up.
“The objective is to develop a resettlement and livelihood restoration framework for the oil and gas sector to be applied in upstream and midstream (crude oil pipeline) sectors,” said the State Department for Petroleum.
“The framework is expected to address acquisition of land, relocation or loss of shelter, loss of assets or access to assets, possible displacement and associated impacts within the core zones and wider catchment area, as future private or public investments are made in the extractive industry and especially oil and gas sector in Kenya.”
However, even as the government seeks to set the rules of engagement with those to be affected by the pipeline, Kenya’s oil export dream is still some way off due to delays in establishment of a viable commercial plan by Tullow Oil, the British firm exploiting the Turkana oil fields.
Tullow struck oil in Turkana’s Lokichar area in 2012 after exploratory drilling, but progress towards full exploitation has been slow, despite billions being sunk into the project.
Development of the oilfield and a pipeline requires the government to approve Tullow’s Field Development Plan (FDP), which outlines the company’s plans to develop the oilfield, manage the impact on the environment and society, and give forecasts for production and costs.
Tullow, together with its former joint venture partners TotalEnergies and Canadian firm Africa Oil Corp, had in March 2023 submitted a final FDP on the Kenya project for approval by the energy ministry, but this was sent back for improvement.
Following the exit of the two joint venture partners, Tullow presented its revised FDP in March 2024 to the government, but this one was also rejected on concerns by the State about the gap between the capital needed to commercialise the Lokichar project and Tullow's resources as indicated by the value of the company's net assets in Kenya.
The government gave Tullow a six-month extension (until December 2024) to address the gaps in the new FDP.
Tullow, which has said that the future of the project is dependent on its onboarding of a strategic investor for the Kenya project, valued its net assets in Kenya at $248.6 million (Sh32 billion) at June 2024.
This valuation is well below the Sh469 billion that is the estimated cost of commercialising the Turkana project, inclusive of an oil pipeline.
