A PSV vehicle being fueled at a petrol station along Kenyatta Avenue in Nairobi.[Wilberforce Okwiri/Standard]
Why Kenya wants to force foreign oil giants into local partnerships
Business
By
Brian Ngugi
| Aug 28, 2025
Kenya's energy regulator has proposed new rules that would force giant foreign oil and gas companies to enter partnerships with local firms and prioritise Kenyan goods and services, part of a sweeping overhaul aimed at maximising domestic benefits from the country’s nascent hydrocarbon sector.
The draft Petroleum (Local Content) Regulations, 2025, to be unveiled by the Energy and Petroleum Regulatory Authority (EPRA) on Friday, form a key part of a broader package of seven new sets of rules. The regulations are designed to govern the rapidly evolving sector from exploration to transportation, with a strong emphasis on local participation, cost control, and environmental safety, Epra says.
The push for local ownership mirrors strategies employed by other resource-rich nations aiming to avoid the "resource curse," where economies become over-reliant on hydrocarbons at the expense of other sectors.
Resource-rich countries like Nigeria and Guyana have implemented strict local content and equity mandates, while nations such as Norway have famously used sovereign wealth funds to ring-fence oil revenues and protect their broader economies.
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The drive for stricter local content rules reflects a common discontent in many developing resource economies, where local communities have often seen little benefit from extracted wealth. In nations like Venezuela and parts of West Africa, foreign energy majors have frequently faced public criticism and government pressure over accusations that they repatriate profits to global headquarters without fostering sufficient local development or equity participation.
Petroleum trucks getting loaded with oil at the Nakuru Terminal. [File, Standard]
The proposed Kenyan rules represent a modern playbook for resource governance, balancing the need to attract foreign investment with the political and economic need to ensure domestic benefit and guard against the economic distortions that have plagued other oil-producing states.
The Local Content rules will require international operators, including their contractors and subcontractors, to "use Kenyan goods, services, and labour as much as possible." This includes mandates to train local staff and submit multi-year research and development plans developed in collaboration with Kenyan institutions.
The push comes as Kenya prepares for commercial oil production from its Lokichar fields, which hold an estimated 560 million barrels of oil. Production is slated to reach 80,000 barrels per day, to be transported via the upcoming Lokichar-Lamu pipeline.
"The regulations aim to promote the participation of Kenyans and their value creation in the petroleum sector," EPRA said in a statement. "They provide a legal and operational framework to ensure that Kenyans and Kenyan businesses benefit meaningfully."
Other proposed regulations include strict frameworks for managing upstream costs, ensuring only pre-approved and justifiable expenses are recoverable—a measure intended to protect national revenue. Further rules set stringent safety and technical standards for pipeline and storage operations and establish procedures for land access and community resettlement.
EPRA will hold a public consultation workshop on the draft regulations today (Thursday) in Nairobi. Epra said in a note ahead of the meeting, the event will provide stakeholders an opportunity to give feedback on the proposals, which the authority says are designed to attract investment while ensuring "responsible resource management."
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