NAIROBI, Kenya, Oct 18 – The International Monetary Fund (IMF) has urged Kenya to minimize reliance on oil whether for fiscal purpose or export as the country gears towards the Early Oil Pilot Scheme (EOPS) project.
Director for the African Department, at the IMF Abebe Aemro Selassie urged Kenya to maintain the diverse economic structures that they have.
He says Kenya should learn lessons from oil exporting countries in the continent and maintain diverse economic structures.
“I think the number one thing that you keep hearing from countries in West Africa, other oil exporters right now, is the importance of maintaining a diversified economy, Those countries are emphasising that they wish they had much less reliance on oil exports,” he says.
Oil dependent countries have registered slowed growth following the drop in oil prices.
Kenya will start exporting oil in June 2017.
This follows President Uhuru Kenyatta’s directive to expedite exportation of Kenya’s first oil. Tullow Oil has confirmed that it will start oil production in March next year.
Briefing President Kenyatta at State House, recently, Tullow Oil Chief Operating Officer Paul McDade said his company has made good progress and will be ready to start oil exportation in June 2017.
The oil will be transported by road from Lokichar in Turkana County to Mombasa where it will be exported.
He said initially 2,000 barrels will be produced per day, adding that Tullow Oil is committed to aggressive exploration that will see at least eight more wells drilled in North Lokichar to scale up production.
“This will take the mean recoverable resources to over a billion barrels from the current estimated 750 million barrels,” McDade said.
Energy Cabinet Secretary Charles Keter said the construction of a pipeline to transport oil from Lokichar to Lamu Port is still on course.
He said the government and its upstream partners, Tullow Oil, African Oil and Maersk Companies, have concluded a Joint Development Agreement (JDA) for the development of the pipeline.
Meanwhile, The Kenya Civil Society Platform on Oil and Gas (KCSPOG) has questioned the overwhelming government backing of the early oil pilot scheme (EOPS) project despite marginal benefits.
In the report, Early Oil from Turkana: Marginal Benefits and Unacknowledged Costs, it questions the production and export of 2,000 barrels of oil per day (bopd) by road and rail for possibly two years.
“Combined, capital, operating and transportation costs are estimated at around USD 63m. With oil prices at USD 46 per barrel (Sh4, 600), total project revenue is only USD 34 million (Sh3.4 billion),” the report states.