Kenyan MPs are under pressure to review the South Lokichar Basin oil development plan ahead of a February 24 deadline, in a project that could unlock hundreds of millions of barrels of recoverable crude.
With only 60 days to hold public hearings across six counties, Parliament faces the rare challenge of either influencing a transformative upstream project or allowing it to proceed without legislative input. The plan merges Blocks T6 and T7 under a joint development framework, raising the cost recovery limit to 85% while securing a 20% government stake, measures aimed at drawing investors to fields long considered marginal.
Gulf Energy, the project operator, will receive exemptions from VAT, import duties, and withholding taxes, while the government’s stake ensures it captures both revenue and risk. Joint parliamentary energy committees are scrutinising whether the proposal protects state interests by balancing investor incentives with fiscal responsibility. Public consultations are scheduled in Turkana, West Pokot, Lamu, Mombasa, Trans Nzoia, and Uasin Gishu.
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The government has defended the plan as both legally robust and economically viable, highlighting that consolidating the two blocks allows for more efficient use of infrastructure, including a shared central processing facility.
Energy Cabinet Secretary Opiyo Wandayi dismissed concerns over the high cost recovery ceiling, pointing to comparable rates in countries such as Angola, Ghana, and Cameroon, and emphasising that no legislation explicitly limits such a rate.
Recoverable reserves in the merged blocks are estimated at more than 400 million barrels, with total capital expenditure projected to exceed US$6 billion over the project’s lifespan.
