Kenya to penalise slow oil and gas explorers

Kenya wants licensed oil and gas explorers to speed up their work to meet the terms of their contracts, and may invoke its right to cash in their guarantees if they fail to do so, a senior Ministry of Energy official said.

Kenya wants licensed oil and gas explorers to speed up their work to meet the terms of their contracts, and may invoke its right to cash in their guarantees if they fail to do so, a senior Ministry of Energy official said.

A squeeze in global capital markets has hurt independent firms’ ability to raise money to drill exploratory wells, causing a handful of oil companies in Kenya to fall behind schedules they are contractually obliged to meet.

The government’s tough new stance could have major implications, pushing out smaller firms in favour of those with greater investment capacity.

“We just want them (explorers) to do their work. If they don’t do the work we cash the bank guarantee,” Martin Heya, Kenya’s petroleum commissioner, told Reuters.

Bank guarantees are usually agreed when companies sign exploration contracts, specifying an amount of money payable to the government should they fail to meet their obligations. The government can also revoke licences.

Explorer Tullow Oil struck a promising oil find in the northern county of Turkana last March, heightening interest in the East African nation’s natural resources.

“Now the interest that is there (in Kenya’s resources) is so overwhelming. If you just sit on the block and do nothing we will take action,” Heya said.

 

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