Thursday, May 29, 2014

OIl & Mining Payback in Kenya

Tullow Oil have just released their Kenya Report on their oil exploration efforts and local impact in the last year with special emphasis on the Turkana area. And earlier, Base Resources who are a signatory to the Extractive Industries Transparency Initiative, had also released their EITI impact report.

In the last year, by their measure, Tullow Oil and Base Resources have paid the Kenya government $22 million and $16 million respectively in direct payments, and with more indirect benefits.  Oil and mining are industries that are complex and expensive to set up, but which don't generate a lot of direct jobs - some of their number include:

  • Last year, Tullow paid Kshs 4.1 billion (~$48 million) to Kenyan suppliers, $100 million to foreign suppliers registered in Kenya and another $100 million to international companies. Of the Kenya supplier amounts, Kshs 259 million went to Turkana business interests.
  • They still need Kenya petrol legislation. 
  • Estimated findings are 600 million barrels  in South Lokichar alone.
  • Infrastructure Needs: Looking at an export pipeline and regional road and rail. Regional countries need to support an export pipeline, agree on what route will such a pipeline take, where the terminal will be (likely to be Lamu) - and who will invest/pay for this. The proposed underground pipeline will need to be a heated one, and at 850 kilometres, will be the longest heated pipeline in the world
  • Social Impact: Tullow have community resource offices in Lodwar, Lokori, and Lokichar - and this year, plan to double the Kshs 233 million ($2.75M) they spent on social projects in 2013, during which they faced community concerns and protests of local impact  which even temporarily shut operations. They have provided 3,000 bursaries and scholarships and teaching materials for 50 schools.
  • Jobs Jobs Jobs: Tullow has 100 employees on site, 70% of who are Kenyan. Another 2,000 are employed by their subcontractors/suppliers and 87% of these are staffed by are locals, and 59% by Turkana people.

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