Chinese Firm Implicated in Kenyan Crude Oil Deal

A Kenyan group is demanding an explanation of the bidding process that led to the award of a Chinese firm the tender for Kenya’s crude.

On August 1, 2019, Kenya exported its first 200,000 barrels of crude oil at a price of Ksh.1.2 billion ($12million).

According to Citizen TV, the sale has however left unanswered questions with critics accusing the government of lack of transparency.

A Kenyan lobby group wants to know how the lucrative oil tender was awarded to ChemChina, a Chinese company.

The Kenya Civil Society Platform on Oil and Gas (KCSPOG) further faults the State for allegedly failing to disclose how much revenue the country is getting from the deal.

“The Ministry indicated there was a bidding process of the oil but we have not had access to any of the bidding documents including which other companies bid for the oil and how much they bid for the oil to award ChemChina, which was the eventual buyer,” VOA quoted Charles Wanguhu, an official from the lobby group.

In a rejoinder, Petroleum Ministry PS Andrew Kamau said the information provided so far was sufficient.

“It is not a fair comment. We told them who bought it, how much they paid for it and the volume. What more would you want? You know people have all sorts of phobias so I can’t really speak to that,” queried Kamau.

However, the ministry was  reluctant to share information on the exact amount in the deal with the Chinese company.

Chinese firms have previously been awarded tenders in the country worth billions of shillings, including building roads and the Standard Gauge Railway line.

“The challenge is that we have a significant amount of debt that has been accrued to China in the building of infrastructures around the country like the Standard Gauge Railway. Therefore, it is significant when you see that if our oil is going to China then we are at risk if we are unable to service our debts,” Wanguhu continued.

Hellen Odegi, an oil and gas expert also noted that history does not favour Kenya when it comes to managing public resources.

“The side I would be worried [about] is because of the history we have had in Kenya of misuse of resources, so that we don’t find ourselves facing another issue like what we have seen in the past two-three years, where massive amount of money is lost in counties and national government such that we don’t make money and it is being pocketed by only two companies” said Odegi.

Kenya discovered its first oil deposits in 2012 and since then, explorations have continued in the Lake Turkana Basin with more deposits being reported.

In previous media reports, Tullow Oil estimated some 560 million barrels in probable reserves.

Currently, Kenya produces about 2,000 barrels of oil per day.

Last month, oil explorer company Tullow said that production could rise to 100,000 barrels per day by 2024.

Header Image Credit: The national