NAIROBI, May 28 (Xinhua) -- Energy experts have urged Kenya to develop a local content policy to encourage locals to participate and benefit from all economic activities along the oil value chain.
Mwendia Nyaga, the CEO of Oil and Energy Services, said on Monday that due to the capital intensive nature of the oil industry, the sector is dominated by huge multinationals which use foreign expertise to carry out oil exploration activities.
"So for the local to benefit from the oil resources they need to be involved in all the stages of the value chain," Nyaga during the Conference on Kenya Extractives Policy Dialogue under the theme "Developing a sustainable in-court value addition strategy: Real Time Policy options for Kenya Petroleum Sector."
The East Africa nation discovered oil deposits in the Lokichar Basin in the Northwest County of Turkana.
So far, Kenya has confirmed deposits of approximately 750 million barrels of oil.
The major stages in the oil value chain includes the exploration, production, transportation, refining and marketing.
Nyaga said that Kenya lacks sufficient expertise in the upstream activities as the country has never been a major oil producing nation.
He noted that typically exploration companies outsource 80 percent of their work to third parties.
"This provides an entry point for Kenyan firms to supply goods and services and help benefit from the oil sector," he said.
The Local Content bill is currently in parliament for debate and when enacted will provide a legislative and policy framework to ensure locals benefit from the activities of the exploration and sale of oil resources.
Nyaga said that prudent commercial exploitation of the oil reserves will help Kenya to diversify its economy that is highly dependent on agricultural exports.
He added that oil accounts for a significant portion of the import bill and hence the sale of oil will save Kenya significant foreign exchange revenue.
Antony Paul, the Principal Consultant Energy and Strategy at the Association of Caribbean Energy Specialists, said that the level of local content in the oil sector is dependent on the capacity of local people and businesses to supply goods and services to oil firms.
"However, for the objectives of oil content policy to be achieved, the appropriate regulatory, monitoring, reporting and oversight framework needs to be in place," Paul said.
He added that best way for Kenya to develop its human capacity in the oil sector is by ensuring that locals are trained by foreign experts in the country rather than having locals to be trained overseas.
President Uhuru Kenyatta is set to flag off the first convoy of trucks ferrying crude oil from Lokichar basin to the coast of Mombasa for export in June 3 under the Early Oil Pilot Scheme (EOPS) that seeks to test the market for Kenyan oil.
The EOPS is an agreement between the oil producing firms and the government to evacuate 75,000 barrels from the oil fields to the international markets.