Kenya proposes rules to require local stake in oil exploration firms

Thu Apr 30, 2015 9:38am EDT
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* Kenya seeking to reap benefits from sector

* Country has commercially viable oil deposits

By George Obulutsa

NAIROBI, April 30 (Reuters) - Kenya has proposed rules requiring oil exploration firms to give local investors a 5 percent stake and use local suppliers and staff for their services to get a bigger share of earnings from the new sector.

East Africa has become a hot spot for oil and gas exploration in recent years, spurred by new finds, but Kenya has yet to update its legal framework for the sector.

Tullow Oil and Africa Oil have estimated discoveries of 600 million barrels to the northwest of Kenya, and plan to submit their development plans to the government by late 2015 prior to commercial production.

The rules are expected to be passed by parliament by August along with a revised petroleum bill, said Ministry of Petroleum and Energy Principal Secretary Joseph Njoroge.

"It is to encourage utilisation of local resources, equipment, whatever is available locally must take precedence over foreign, mostly the human capital, (which) we have a lot," Njoroge told Reuters.

Oil industry analysts and observers say the law will be a boon for local companies and workers in the near-term, but that there would be need for programmes to expand capacity if Kenyans were to meet all the laid out requirements in the regulations.   Continued...