Trump offers a flicker of hope for Kenya's oil project

US President Donald Trump’s “drill, baby, drill” call on the oil and gas sector to crank up oil exploration and production has been criticised for its potential to shift the growing focus from renewable energy and keep the world hooked on fossil fuels.

It is, however, finding a fertile audience among countries that have oil and gas resources that are yet to be exploited.

This is especially the case for developing countries, which feel they also deserve the chance to use their resources to grow their economies despite the harm that dirty fuels cause to the world.

There are arguments that oil and gas and coal can help Africa deal with its energy poverty challenge, which is seen in more than 600 million people on the continent not having access to electricity, but also using dirty fuels as a means to enable their transition to renewable energy.

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Locally, there is a feeling that the policy shift by the new US administration could alter the thinking among investors and unlock funding that could see investors pump money into Kenya’s oil sector.

The country’s only discovery of what it says is commercially viable oil in Lokichar, Turkana County, has failed to make progress owing to little interest from deep-pocketed investors.

Its other fossil fuel project that was found to have commercial potential, the coal resources in Mui, Kitui County, has suffered what fossil fuel enthusiasts term “demonisation of a segment of the industry.”

Although it has not been abandoned altogether, it has also not moved for more than a decade since the discovery was made.

At the Powering Africa Summit in early March this year, US Energy Secretary Christopher Wright said the country would not prescribe to Africa how it should go about meeting its energy demands and would instead work with the continent to defeat energy poverty using the technologies it chooses.

This is even as he termed efforts to push the renewable energy agenda while dissuading oil-rich countries from slowing down on exploration and production as “so nonsensical, paternalistic, and postcolonial.”

It is not lost on observers that Mr Wright spoke just days after the US cancelled Power Africa on February 26.

Power Africa, the US initiative to increase electricity supply in Africa, was launched by former US president Barack Obama.

The initiative heavily focused on renewable energy and aimed at increasing installed power generation capacity in Africa by 30,000 megawatts (MW) by 2030. 

The US has been accused of pushing Africa into a “fossil fuel trap” by pulling the plug on Power Africa while appearing to push Africa to focus on fossil fuels.

The local energy sector, however, sees this as a window, perhaps the last one, to attract investors and unlock the billions of shillings worth of oil and coal discovered in the country.

Kenya has been unable to unlock these projects partly on account of firms shying away from pumping money into the fossil fuels industry globally but also in an emerging oil province in Kenya.

Energy and Petroleum Authority (Epra) Director General Daniel Kiptoo said the direction taken by the Trump administration could see some kind of renewed interest in Kenya’s oil and coal. A move, he noted, could enable the country to get the best out of both worlds of fossil fuels and renewable energy.

While he noted that Kenya remained intent on pursuing renewable energy, it still had fossil fuel resources that could add value to its economy, which remained untapped.

“What we have heard from the US administration is that they will not prescribe to any country what their source of energy should be but will partner with countries to develop energy and reduce energy poverty within the African continent,” said Mr Kiptoo.

“It is good news for Kenya because there has been a push not to develop fossil fuels… not to develop our oil resource in Turkana that has seen it experience difficulties to find financing. There was also a challenge in trying to develop our (coal) resources at Mui basin. We see this as a good opportunity because we might be able to develop our oil and gas resources and our coal resources in Kitui.”

He noted that while Kenya planned to exploit its oil resources does not mean that it would abandon plans to increase production, particularly of electricity, through renewable energy.

“We can develop our coal in Kitui and our oil in Turkana and at the same time develop our renewable energy resources of geothermal, wind and solar,” said said. 

“Kenya is 92 per cent green. We are very well endowed with renewable energy resources as a country and the government, especially the current administration, has been championing the growth of renewable energy. The stand that has been taken by the US administration, for me as a regulator and energy practitioner, is good because it enables us to get the best of both worlds.”

Kenya has been struggling to move its oil project to the commercial phase. Tullow Oil, the British firm that operates the Lokichar blocks, which are the only commercially viable blocks in Kenya so far, has for about three years now been trying to attract a strategic investor without success.

The investor was expected to pump in money for investments, including the oil production facility at the oil fields and the pipeline to Lamu to enable the country to start production and export of oil from the area.

Tullow has also faced setbacks with the government delaying approval of its Field Development Plan (FDP).

Tullow submitted the FDP to Epra in December 2021 but updated it and submitted it afresh in March 2023.

Following review, Epra declined to approve the plan in June 2024 and instead handed it back to Tullow to address certain gaps, which was expected to have been done by the end of last year.

In the FDP, Tullow details how it will go about developing the oil fields and producing the resource it estimates to be in the region of 470 million barrels of oil.

The firm has said the development will entail a production facility at Lokichar that will produce 120,000 barrels of oil per day and an 892-kilometre pipeline to transport the crude oil to Lamu Port for export.

The firm has in the past said the failure to get the go-ahead from the government has been holding back the project. It has been noted that only after FDP approval will investors give the project proper consideration.

Tullow expects to reach a financial close within a year of the FDP being approved and start developing the fields in Lokichar.

This is expected to take three years after which the country is expected to export its first barrels of commercially produced oil.

The date for the first oil has always been a moving target, and this recently moved to 2028, which considering the delays now appears too ambitious.

Last week, MPs directed authorities to finalise the review of the FDP by June this year and pave the way for the development of the project.

The National Assembly’s Liaison Committee in its report on the 225-26 Budget Policy Statement directed the Energy and Petroleum Ministry and Epra to fast-track the review of the FDP and forward it to parliament by June 30 this year. It also wants Tullow to onboard the strategic investor and get the project moving.

Partly due to environmental concerns, Kenya has also been unable to move its coal project forward.

The Mui basin in Kitui County is estimated to have 400 million tonnes of coal reserves with a possible value of Sh3.4 trillion, although major issues have impeded its commercial production, including the criteria used in the selection of the firm to produce as well as concerns about the impact of coal mines on the local community and environment.

Terje Osmundsen, founder and chief executive of Empower New Energy, a renewable energy firm with a presence in Kenya and other countries, said the “team Trump is seeking to push Africa’s nations into the fossil fuel trap.”

“In most cases, it’s cheaper for Africa to build hydro, solar and wind energy than investing in new fossil fuel plants,” said Mr Osmundsen in a post on social media on March 10.

“Renewable energy has created hundreds of thousands of jobs in Africa in the last years.”

He also notes that plans in place would result in millions of direct jobs in the renewable energy sector across the continent by 2030.

“Nobody should deny or criticise governments in Africa for seeking to extend investments in, and revenues from, fossil fuels. But looking to the future, a large majority of Africa’s leaders have concluded that massive investments in clean energy are needed to secure the continent’s future,” said Mr Osmundsen.

Other champions of Trump’s stand on fossil fuel include the Africa Energy Chamber, the South African-based advocacy group.

NJ Ayuk, executive chair of Africa Energy Chamber, reacting to Trump’s administration freezing aid in February this year noted that this presented an opportunity for Africa, in that while it presented short-term pain, it has the potential to translate into long-term gain.

Mr Ayuk, who has been pushing for the empowerment of the continent using the resources it has and opposed aid, noted that harnessing Africa’s oil and gas industry represented more than revenue for African governments but also a free market solution that created pathways for Africans to help themselves. 

While he is a proponent of Africa tapping oil and gas full throttle, he noted that this could be used as a platform to transition the continent into renewable energy.

“We endorse an energy mix approach that allows Africa to use and sell our own hydrocarbon reserves to alleviate energy poverty, while at the same time moving toward a future in which renewable energy sources power the continent,” he said in a statement. 

“The energy mix method can help more people more quickly because it takes a practical, people-first approach to helping those who have traditionally been left behind by the energy sector while moving us toward greener energy sources.”

Ramping up gas production, he said, can help alleviate the lack of access to electricity and will create thousands of new employment opportunities in Africa.

He noted that as presented, Africa’s energy transition might have the risk of leaving people who do not have access to energy in the fossil fuels era without electricity in the renewable energy era, which he termed as a transition from “dark to dark.”

“We must deliver energy to the people of Africa and then worry about transitioning to environmentally friendly alternatives, just like we have everywhere else in the world,” he said.