More Oil blocks expected to be relinquished in 2014/15 – Experts

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More companies are expected to lose their blocks in Kenya as a result of relinquishments in the coming months.

This is in compliance to their production sharing contracts that demand that explorers relinquish everything in case no discovery is made by the third phase.

In the first and second phases companies are expected to relinquish 25 percent of their acreage from where they are expected to have carried out studies and seen no viability.

Some of the blocks will however may be lost as some companies are yet to start any works on their blocks despite their time schedules running out.

According to oil expert Mwendia Nyaga it is however up to the government to enforce that the relinquishment actually takes place.

“After two to three years of each phase the explorers are expected to surrender a certain percentage back to the government unless the minister for energy approves otherwise. I can already foresee a lot of relinquishment in 2014-15, the problem is that historically companies have always given reasons why they should not cede,” he says.

The government is however seeming more determined to repossess such blocks from license holders who seem to be more of speculators if the Vanoil’s case is anything to go by.

According to mining cabinet secretary Najib Balala his ministry will be blacklisting companies that breach contracts in terms of return of exploration land in the end of their time.

“We are working to ensure that we have a digital database that will ensure that once your time is up and you do not abide by your contract the system checks you out automatically,” says Balala.

“Some of the holders of licenses seem to have received them with no intention of carrying out any work but to wait for the Chinese to come and sell equity to them to simply make a kill.”

Energy cabinet minister Davis Chirchir has also in the past days said the government may be speeding up the allocation of some 15 blocks that are unlicensed (8 of which are as a result of relinquishment) to ensure that plans being made by his ministry are supported by facts on the ground.

“Currently we want to build a pipeline starting in Lokichar to Lamu since some of the oil that we have discovered is there but what if we find oil elsewhere,” he asks. “Will it still be wise to still use the same route, that is why we need to license the free blocks fast so that studies can be carried out.”

Chirchir told journalist at the side lines of the Oil and Energy local content convection that his ministry was discussing internally as to whether new block licensing would be done prior or after the enactment of an energy bill expected later this year.

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