Director of DPR, Mr. Osten Olorunisola
The Director of DPR, Mr. Osten Olorunisola, has blamed delay in the establishment of a national oil company in Nigeria and engagement of host communities as reasons for inflated costs and rip-off by International Oil Companies (IOCs).
Olorunisola made the observation during a meeting with a delegation of top government officials and members of Kenya Parliament, who were in Nigeria for interaction with regulatory authorities on how to firm up appropriate regulations for the country’s energy sector.
The DPR director, who attributed the setbacks in the Nigerian oil and gas industry to wrong fiscal policy, urged the government of Kenya to put in place the right fiscal terms for volume of gas production and utilisation, as well as laws that will minimise spills and boost the participation of host communities and local companies in the country.
Olorunsola who advised Kenya to learn from Nigeria’s mistakes urged the country to plan, for appropriate utilisation of the expected oil revenue before the discovery of oil and gas in commercial quantities.
He suggested that production sharing contract (PSC) arrangement should be adopted as the strategy to attract transparent foreign oil players into the country and have resources to develop other sectors of the Kenya economy during exploration and development stages.
“On discovery of oil, the government of Kenya should build reserves through reserves replacement strategy so that production output will be sustained over a long period and bring benefits to the people”, the Director told the delegation led by Kenya Energy Minister, Hon Kiraitu Murungi.
He described the partnership between Kenya authority with CAMAC Energy to explore for oil and gas as a laudable step toward realising the dream of becoming an oil and gas-producing nation. According to him, the determination of CAMAC to partner Kenya government in securing information that would guide the legal framework for exploration and production was “possible as a result of transparency record of the company in Nigeria”.
“If CAMAC is not sincere and honest in Nigeria and other countries where it is operating, the fact-finding information by the Kenya delegation would not have been possible today,” Olorunsola said.
He however assured that the Federal Government would provide necessary support and technical assistance that will help Kenya to avoid the mistakes of Nigeria.
Speaking at the event, Chairman of CAMAC Energy, Dr. Kase Lawal, commended the government of Kenya for the allocation of four exploration blocks to CAMAC. According to him, the opportunity in signing the first Production Sharing contract (PSC) with Kenya government was in recognition of African’s potentials in exploitation of the continent’s resources for the benefits of Africans.
He said: “The determination and commitment of the Kenya government to ensure that the country becomes part of oil producing nations of the world. That is why the activities of CAMAC in Kenya will be for the benefits of Kenyans”.
CAMAC Energy was awarded exploration Blocks L1B, located onshore in the Lamu Basin , and L16, located in the Lamu Basin transition zone. Block L16 is bordered on the east by Block L8, operated by Apache Corporation (NYSE: APA), and is located just northwest of Block L9, operated by Ophir Energy Plc (LSE: OPHR).
In addition, the Company has signed PSCs for Block L27 and Block L28, two recently created deep water blocks. The two offshore blocks, which are contiguous, cover a combined area of approximately 21,170 square kilometres. Blocks L27 and L28 are immediately east of deep water blocks L11A and L11B, respectively, both operated by Anadarko Petroleum Corporation.
CAMAC Energy will be the operator and have a 90percent interest in all four PSCs, with the government of Kenya holding a 10 per cent carried interest prior to designation of any commercial discoveries. The Company expects to partner with an indigenous company for a minority interest.