TURKANA OIL DISCOVERY: Blessings or Curse??

On Monday evening, a wave of excitement swept through Kenya and the social networks after President Mwai Kibaki announced that the UK petroleum explorer that unlocked billions of barrels of oil in the neighbouring Uganda had made a major breakthrough with the discovery of oil in Turkana.The President, who made the announcement at a public function in Nairobi, said Tullow Oil made the discovery at the weekend but cautioned that commercial viability of the oil find remained uncertain."This is the first time Kenya has made such a discovery and it is very good news for our country,” President Kibaki said, “It is, however, the beginning of a long journey to making our country an oil producer, which typically takes more than three years.”
Oil industry experts said that apart from raising Tullow’s profile as a steady oil hunter with a proven track record in finding oil in Africa, the discovery has significantly lowered the risk profile of oil exploration in Kenya setting the stage for new investments.
Mwendia Nyagah, a consultant on petroleum issues said that the oil find risk has technically lowered Kenya’s exploration risk and that we are likely to see companies spending more here because indications are that their investment will not go to waste.
The discovery of oil in Turkana is also likely to trigger major a shake-up of firms holding exploration licenses for speculative purposes as more newcomers line up for a piece of the action.
Despite the good news, some Kenyans are already concerned about what has been called the oil curse. That’s the misfortune of corruption and misrule that people believe will result from being an oil producer, yet, that fear is real and can’t be wished away, because it’s what we’ve seen chaos in other oil producing countries in Africa and the Middle East.
It shouldn’t be that way and here’s why. Norway and Ghana have provided us with models to follow. First, Norway’s management of its oil sector has been admired mainly because it balances the protection of the environment with the need to access energy for economic growth.However, Norway’s real success has been in managing oil revenues. The groundwork for this was laid early on in the 1970s when a political consensus was reached on national control of the direction of petroleum activities. That’s to say, political parties agreed to keep oil out of election campaigns, and they’ve so far kept their promise.That’s what Kenyans should think of doing right now before oil starts flowing, otherwise differences will emerge. It won’t be easy, as Nigerian case shows. While Tullow is likely to be the main producing company in Kenya in the initial period, the government should ensure it retains greater ownership control of its resources as well as negotiate a better profit sharing agreement. The best way to achieve this is by promoting competition within the oil sector. At the same time, the government should work quickly to improve the technical skills of the local experts because that’s key to sustainable development of the sector.

Kenya should also borrow a page from Ghana in one other respect: allow as much transparency as possible. That’s only possible if Kenya joins the World Bank’s Extractive Industries Transparency Initiative’s (EITI), whose objective are to facilitate the contribution of the mining industry to poverty alleviation and economic growth through promotion of good governance and sustainable development. Countries have to report how they use their oil revenues. So far, there are 35 countries that have joined EITI, Ghana being one of them.If you see the government shying away from joining EITI, then be afraid they don’t want accountability because they want to steal oil money.