Crafting of the law to govern sharing of revenue from oil and gas mining should be delayed until the actual quantity of the resources is known.
“The terms of sharing of revenues from natural resource exploitation between the central government and counties should be decided once the volume and expected time-span for the exploitation of available resources are known,” the IMF said.
Crude oil was first discovered in the country in March 2012 by Tullow Oil Plc of Britain in block 10BB, which it jointly operates with Canadian Africa Oil Corporation.
In its latest report on Kenya, the International Monetary Fund notes that the volume of crude oil discovered in the country to date holds the potential of changing the current account (measure of exports against imports) balance to surplus once production starts.
AT PAR WITH EQUATORIAL GUINEA
Tullow puts the quantity of crude oil discovered so far at about 600 million barrels, with potential to exceed a billion. The projected country reserves are at similar levels with those of Equatorial Guinea and the Republic of Congo, which are sub-Saharan Africa fourth and fifth largest oil producers respectively, the global lender says.
In its report, the IMF has called for a review of the petroleum exploration and production law to address emerging concerns in the upstream sector and creation of a specific law to guide exploration for natural gas when the time is right.
It especially criticised the current Petroleum (Exploration & Production) Act that is nearly 30 years old saying, it does not reflect costs, prices and production volumes.
Kenya’s petroleum regulatory and fiscal regime dates from 1986 and is in need of modernisation. New production-sharing terms for gas need to be specified and a full gas-specific regulatory framework is required,” it said.
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