Kenya's first licensing round expected in 4Q2014 at earliest

Kenya’s first licensing round was originally scheduled for June 2013 and was to offer eight blocks for bidding, but plans have now stalled pending the passage of the new energy bill, expected in June this year. As a result, the round is not expected to be launched until 4Q2014 at the very earliest.

 

The proposed energy bill will bring significant changes to the fiscal and regulatory environment of the country’s oil and gas industry, according to GlobalData. The current regime is expected to be altered to add royalties and provide gas-sharing terms and windfall profits. Although the details of the royalty have not yet been outlined, the market analyst believes that the introduction of such an upfront payment would undoubtedly represent a setback in the relative attractiveness of the regime. Another significant change is the introduction of licensing rounds for hydrocarbon blocks. The draft energy bill also sets out a framework of environmental and other regulations for upstream oil and gas activities, and proposes that these should be enforced by the Cabinet Secretary under advisement by a new body, the National Fossil Fuels Advisory Committee. Furthermore, more stringent local content requirements are expected to be placed on exploration and production companies, which will potentially increase costs.