The discovery of oil in Kenya’s northern Turkana region in 2011 was received with excitement across the country. For residents of Turkana, one of Kenya’s most marginalised areas with high levels of poverty and illiteracy, the new discovery signalled new found wealth.
On Monday, London-based exploration firm Tullow Oil announced it had temporarily suspended all operations in the Turkana region following demonstrations over the weekend. Led by local leaders, about 2,000 Turkana residents held demonstrations demanding to be employed at the company’s sites in Ngamia-1 and Twiga South-1, its largest operations in the area.
Africa Oil Corp, a Canadian oil and gas company, holds a 50% interest in the wells along with operator Tullow Oil. Other than Kenya, Africa Oil has assets in Ethiopia and Somalia through its 45% equity interest in Horn Petroleum Corporation.
According to Keith Hill, CEO of Africa Oil, the company in partnership with Tullow has hired 800 people from the local communities and is investing in building capacity of local people. The firm’s goal is to have local people working at its site with “little or no foreigners” present but this cannot be achieved “overnight”.
“I think that is the issue with Turkana; people want jobs overnight,” says Hill. “[The] biggest challenge is everyone wants to be involved in the project. There aren’t enough jobs to go around, there isn’t enough capacity that’s existing in the country to fulfil all of the jobs. I think that the thing we jointly have work to on together is building that capacity [and] giving as many jobs as we can to the local communities.”
Hill noted that technical risks is the first challenge investors face when scouting for oil in Kenya, but after discovery, the difficulties “start shifting to more social and development challenges”.
“That is where we are now, we found oil and the community is very focused on it,” he says. “My experience of working 30 years in the industry and working in Africa since 1989 is that is the number one issue: people want to see how they are going to benefit from this oil.”
Hill says operations at the sites will resume after talks with local communities, government and other stakeholders.
“It would take us a week or two to get back once we have come to agreement. It’s really how long does it take us to basically sit down with all of the interested parties,” says Hill. “The people in Turkana want to go back to work, we want to go back to work and the government wants to see the oil process put forward. So, our goals are all the same.”
Training and education
Hill says Tullow Oil has been sending people overseas for training. However, “getting them to come back” after training is a big issue.
“When you send people overseas they don’t always come back. One of the things we are also looking at is strengthening universities here. There is very strong education system here… what we need to do is strengthen those to be more specifically tailored to the oil industry; so, petroleum engineers, geologists, geophysicists, people that are not normally trained at the universities.”
Tullow and Africa Oil are also investing in vocational training for welders, pipe fitters, electricians and other skilled labourers drawn from local communities.
“Eventually we want to replace all of our people with local people. Our goal is to have little or no foreigners coming here and working. Local people will be more motivated to make this a successful project because they have a vested interest in the country.”
Hill says other than building capacity in human resources, there is also need to build capacity among businesses in Kenya.
“We are going to need to spend somewhere between US$4bn-$7bn developing this oil. The more money that can stay in Kenya, the better,” he says, adding that the East African nation has “a very good base” from which to start.
“They have a high education level, they have a very good civil service, they have a good court system [and] they have a middle class to build upon. I am very optimistic that Kenya could be… the shining example of how resources can be developed responsibly, not just in Africa but in the world.”
To achieve this, he says, Kenya ought to learn from other oil rich countries and address issues of corruption and lack of transparency.
“Corruption is going to be one of the biggest things we need to tackle. [In] the oil industry in Nigeria that was one of the biggest issues when it started off. We really do only have one chance to get this right [in Kenya]. The good news is we have about three or four years before we start production and during that time we can get a lot of these things sorted out.”
Hill says Africa Oil and its partner Tullow plan to drill a total of 25 wells by the end of 2014, two thirds of which will be in the Lokichar Basin in northern Kenya, while the rest will be in other parts of Kenya and Ethiopia.