State eyes Sh145b investments in oil, gas exploration by 2027

The government is targeting Sh145.3 billion worth of investments in the ="https://www.standardmedia.co.ke/business/business/article/2001514514/kenya-to-restart-licensing-of-10-oil-and-gas-blocks-in-september">petroleum blocks< by the year 2027 in the latest strategic plan by the Ministry of Energy and Petroleum.

The Sh2.5 trillion strategy covering 2023-2027 places emphasis on petroleum and natural gas exploration. The document notes the availability of vast sedimentary basin covering 83 per cent of the country’s surface area for exploration and development of the minerals.

The strategy unveiled by Energy and Petroleum Cabinet Secretary Opiyo Wandayi in Nairobi yesterday cites a ready and growing domestic and regional demand for energy and petroleum products and services, which informs the need for increased investments in the sector.

The CS was flanked by the principal secretaries of Petroleum Mohamed Liban, Energy's Alex Wachira and Economic Planning Dr Boniface Makokha.

The Sh145.3 billion target in investments in petroleum blocks will be a growth of Sh144.4 billion when compared to the baseline value of investments in 2023 which stands at Sh915 million.

In the plan, the ministry seeks to gazette five petroleum blocks and market 15 during the period. A budget of Sh10 million has been specified for gazetting the five blocks and Sh160 million for marketing.

These targets are on the backdrop of the milestones recorded in the 2018-2022 strategic plan which targeted to drill 20 exploratory and appraise wells to ascertain viability of oil reserves.

In the period, the ministry realised 10 appraisal wells within the South Lokichar Sub-basin and two exploratory wells in the Lamu Basin.

Mr Liban said the petroleum sector remains a critical driver of the country’s economy, noting that the State Department for Petroleum has developed requisite blueprints, among them the draft petroleum policy to guide the growth of the sector.

“To enhance oil and gas exploration, the department has revolutionised activities in the country’s 50 exploration blocks that traverse Kenya’s four sedimentary basins of Lamu, Anza, Mandera and Tertiary Rift, covering approximately 487,000 km2,” said the PS.

He stated that the government has put in place a robust mechanism to review and update the data of the country’s petroleum blocks through modern geoscientific data acquisition in preparation for licensing bid rounds with potential investment partners.

“This represents huge strategic investment opportunities in premium exploration blocks,” said Liban.

He pointed out that the opportunities in South Lokichar oil discoveries are progressing to the production phase with the government onboarding of a high-capacity strategic partner.

“This is in addition to the development and commercialisation of vast natural gas resources, multi-client data acquisition projects and various infrastructure development in upstream petroleum,” he said.

CS Wandayi listed the development of the Energy Policy 2018, the Petroleum Policy 2018, Kenya National Energy Efficiency and Conservation Strategy 2020 and the Bioenergy Strategy 2020 as some of the achievement recorded in the previous strategic plan.

He said to operationalise the Petroleum Act, 2019, the Liquified and Petroleum Gas Regulations, 2019 and Petroleum Pricing regulations 2022 have been developed.

“These instruments have not only helped operationalise the sectors but also catalysed the processes,” he said.

The CS noted the reforms in the National Oil Corporation of Kenya, which is in a Sh6 billion strategic partnership with RUBiS to resuscitate its business and the folding of Kenya Petroleum Refineries Ltd (KPRL) as some of the restructuring the government is spearheading in the sector.

KPRL is set to be acquired by Kenya Pipeline Company as part of the government’s plan to consolidate the oil assets and business under one entity. “Under the 2023-2027 strategic plan, the ministry commits to improve the institutional, policy and legal and regulatory frameworks for the energy and petroleum sub-sectors,” said the CS.

In the plan, the ministry notes a budget deficit of Sh1.9 trillion over the five years.

Plans laid out by the ministry to mobilise resources include lobbying the National Treasury, strengthening ties with development partners, pursuing public private partnerships, explore carbon trading in the renewable energy space and leveraging on geo-scientific data to generate revenue and attract investment in exploration.