Social and Environmental Impacts of Oil and Gas Industries in Kenya

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Economic Impact

According to Phumulele Mbiyo, regional head of macroeconomic research at CfC Stanbic Bank Ltd, oil exports would boost the Kenyan Shilling, reduce spending on imports and stimulate investment for infrastructure.[1] However, there have been concerns that a stronger a currency could also damage the non-oil sector, making it more difficult to export which is known as the phenomenon of the "Dutch Disease".[2] In an article for the Daily Nation, Dr Cheeseman, the Director of the African Studies Centre at the University of Oxford, claims that there has been little discussion in the Kenyan government regarding future oil revenue expenditure.[3] Clause 159 of the drafted energy bill proposes the establishing of a sovereign wealth fund to provide a savings base and meet public demand during shortfalls.[4]

As of November 2013, Kenya spends $8 million per day on importing oil, which it mainly pays for by exporting tea and coffee, a balance which could change.[5] According to an IMF report oil exploration in Kenya has led to a surge in capital imports, yet the overall public debt to GDP ratio has decreased.[6]

Social Impact

The World Bank estimates that the oil discoveries in Turkana County could lift 900 000 people out of poverty.[7] However, it is unclear how this figure was reached, and who exactly will benefit. Turkana County is the poorest region of Kenya, and the oil discoveries may counteract Turkana's social and economic marginalisation.[8] However, there have been fears that Kenya will encounter the familiar resource curse scenario. According to coverage by Pambezuka News, a pan-African news journal produced by policy makers, academics and civil society organisation, policies of redistribution are necessary to prevent exploitation and detrimental social impacts of oil exploration.[9] The article predicts that the oil industry will create few jobs for the Turkana people, while disrupting their pastoral way of life, destroying their livelihoods, grazing lands and ancestral shrines, in return for little compensation.[10]

Oil exploration has brought an influx of buyers depriving the Turkana people of their land.[11] An article in Think Africa press argues that this could cause conflict and violence in Turkana County.[12] In October 2013, 400 people took part in a protest against Tullow Oil's activities.[13]According to Eliud Omeri of the Turkana Development Initiatives, out of 500 people hired to conduct oil exploration in Turkana County, only 40 are locals.[14] MPs for Turkana County have accused Tullow Oil of neglecting the local population in terms of jobs, tenders and vehicle hire contracts.[15] However, Tullow claims it has invested in the local community through building a school and health centre, and offering scholarships.[16] According to the Africa Practice, a strategy and communications consultancy, 800 of Tullow Oil's 1400 employees in Kenya are locals.[17]

Environmental Impact

Oil exploration can cause a range of environmental impacts. Oil exploration in Kenya is still in the early stages, but there are fears of major environmental degradation caused by gas flaring and oil spillages.[18] The Environmental Management and Coordination Act (EMCA) 1999 has been enacted to enforce environmental regulation on oil exploration. However a report by the Heinrich Boell Stiftung raises doubts over the institutional capacity and effectiveness of the EMCA.[19] An article in Think Africa Press claimed that "dwindling reserves of fertile land will be appropriated for mining activities, and risks of air, soil and water pollution are significant."[20] In a presentation to the Insitute for Security Studies in 2012, Joseph Kurauka stated that oil exploration could lead to issues of waste disposal, noise pollution, habitat destruction and disease.[21] He added that as in the Niger Delta oil exploration could cause soil and water pollution, thereby contributing to broader environmental issues.[22] However, Tullow Oil maintains that the drilled holes are only the size of a plate, and that the environmental impact is minimal.[23]

References

  1. "Kenya From Nowhere Plans East Africa’s First Oil Exports: Energy" Bloomberg, 20 August 2013.
  2. "Will oil be a blessing or a curse for Kenya? – Lessons from Indonesia and the rest of the world" World Bank Blogs, 4 November 2012.
  3. "How Kenya can make the most of its oil and gas find" Daily Nation, 25 October 2013.
  4. Kenya Petroleum Sector Scoping Study”. Sustainable Integrity GmbH, April 2013.
  5. "Kenya From Nowhere Plans East Africa’s First Oil Exports: Energy" Bloomberg, 20 August 2013.
  6. "Macroeconomic Outlook and Program Performance" IMF, 1 April 2013.
  7. "Kenya Sets Framework to Manage New Petroleum Wealth" World Bank, 27 August 2012.
  8. "Kenya: Oil and Isolation" World Bank, 17 June 2012.
  9. "Kenya: A fair share of oil revenue for the Turkana" Pambezuka News, 31 May 2012.
  10. "Kenya: A fair share of oil revenue for the Turkana" Pambezuka News, 31 May 2012.
  11. "Oil and Gas Discoveries in Kenya and the Region: Opportunities and Challenges" Institute for Security Studies, 6 November 2012.
  12. "Predicting Africa’s Next Oil Insurgency: The Precarious Case of Kenya’s Turkana County" Think Africa Press, 13 September 2013.
  13. "Kenya MP accused of inciting protests against oil firm Tullow" Reuters, 31 October 2013.
  14. "Oil and Gas Discoveries in Kenya and the Region: Opportunities and Challenges" Institute for Security Studies, 6 November 2012.
  15. "We have lost hope in Tullow Oil, Turkana residents say" Standard Digital, 2 November 2013.
  16. "We have lost hope in Tullow Oil, Turkana residents say" Standard Digital, 2 November 2013.
  17. "We have lost hope in Tullow Oil, Turkana residents say" Standard Digital, 2 November 2013.
  18. "Kenya: A fair share of oil revenue for the Turkana" Pambezuka News, 31 May 2012.
  19. "Towards a coherent and cost effective policy response to climate change" Heinrich Boell Stiftung, accessed 21 November 2013.
  20. "Predicting Africa’s Next Oil Insurgency: The Precarious Case of Kenya’s Turkana County" Think Africa Press, 13 September 2013.
  21. "Oil and Gas Discoveries in Kenya and the Region: Opportunities and Challenges" Institute for Security Studies, 6 November 2012.
  22. "Oil and Gas Discoveries in Kenya and the Region: Opportunities and Challenges" Institute for Security Studies, 6 November 2012.
  23. "We have lost hope in Tullow Oil, Turkana residents say" Standard Digital, 2 November 2013.