The Petroleum Sector

The petroleum sector in Kenya is organized into three sections: the upstream, mid-stream and downstream. The upstream section involves the process of exploration, development and production of crude oil and natural gas. The mid-stream section revolves around storage, refining and transportation of crude oil into consumable petroleum products whereas in the downstream section, refined products are made available to the consumers through supply and distribution, for example at petrol stations.

1. Upstream Petroleum

   Kenya has four (4) petroleum exploration basin and these are: Lamu Basin, Anza Basin, Mandera Basin and Tertiary Rift Basin. Oil and gas exploration in the country began in 1956 and the breakthrough came in March 2012 with the discovery well –Ngamia 1 Well, in Lokichar Basin in Turkana County. As at December 2015, seventy four (74) wells had been drilled with twelve (12) hydrocarbon discoveries to date, nine (9) of which are in Turkana County. The other three are in Anza Basin and Offshore Lamu.

2. Licensing Of Petroleum Exploration Blocks

   As at December 2015, there were forty six (46) petroleum exploration blocks in Kenya of which 44 have been licensed and are operated by twenty three (23) International Oil Exploration Companies.

   The exploration blocks are expected to increase to fifty five (55) once nine (9) blocks under relinquishment obligations from several blocks are gazette. Licensing of exploration Blocks, is governed by the Petroleum (Exploration and Production) Act Chapter 308 of the Laws of Kenya. All contracts are based on a Model Production Sharing Contract (PSC) issued as a schedule to the Regulations issued under Section 6 of the Act. The Act is currently under review. The proposed “Petroleum (Exploration, Development and Production) Bill 2015” and Model production sharing Contract 2015 provide a framework for the contracting, exploration, development and production of petroleum resources for prudent revenue management of the resources taking into consideration environmental concerns and local content.

3. Midstream Petroleum

   Petroleum is one of the prime movers of the country’s social and economic development. Petroleum products are predominantly used in transport, commercial and industrial sectors. Kenya imports all its petroleum products requirements. The Ministry coordinates this activity with oil marketing companies through a process known as an Open Tender System. The Kenya Pipeline Company provides product movement infrastructure including storage and oil pipeline services.

4. Downstream Petroleum

   Distribution and Marketing of petroleum products is done by oil marketing companies. The National Oil Corporation of Kenya (NOCK) is the state body that is engaged in this area. It is also involved in the upstream activities.

Contacts for State Department of Petroleum is petroleum@energy.go.ke

Source: Ministry of Energy and Petroleum