Even with reports that Kenya could have struck oil in Lodwar, the fuel situation in the country has been declared a crisis at the highest levels of Government. And the situation doesn’t look promising.

Industry experts now say that there is little the country can do besides planning for the future.

Kenya imports crude oil for national consumption. But it imports just enough to last a month.

“We buy oil in one-month instalments and that means if something big enough to interrupt supply happened, we would be left in a total crisis,” said an industry expert who has been in the business for 25 years. “Worse off would be if the world oil prices keep rising. It would probably be a shut down because of our national inability to cushion against rising prices. We do not have oil reserves.”

According to the expert, one of the solutions the Government should seek is oil exploration. But they want it to play a more active role and not just leave the job to foreign companies.

In the last few years, world superpowers have been mapping strategies that would help them deal with rising demand for oil and oil products.

China, with a population of more than one billion, has specifically been mopping up natural resources across the world, oil included. The country’s increasing appetite for oil has seen its firms exploring for the commodity in neighbouring Sudan.

In Kenya, President Kibaki has in the last one year taken steps toward diversifying the country’s oil supply, which is predominantly Middle East, by courting Libya.

Industry experts say Kenya has no capacity to order commercial quantities of oil and it has no strategic oil reserves. Other countries like the US and Norway have physical facilities where reserves are stored in case of an energy emergency.

A senior official at the National Oil Corporation of Kenya confirmed that the country operates on tanker-to-fuel pump purchases, which gives the economy no cushion against frequent price changes on the international market.

And this has come at a time our consumption has grown from 2.6 million cubic metres in 2003 to 3.7 million cubic metres in 2006. Similar growth has also been registered in neighbouring countries Uganda, Tanzania, and Eastern DR Congo.

Mr Wachira says that in 1984 the Government of Canada gave a grant to Kenya to build five tanks with a total of 200,000 cubic metres of strategic storage at Kipevu in Mombasa.

Strategic storage

These were built but never became strategic storage. The Government instead leased them to the Kenya Pipeline Corporation for import storage.

“It helps to have a long-term relationship with suppliers. We can always count on such contracts to cushion us as opposed to buying from spot markets. Right now we are buying from the spot market,” Mr Wachira said.

Through the Ministry of Trade and Industry, the Government requires all petroleum companies to maintain a minimum of 20 days’ operating stock of all petroleum products.

The Energy Act, which became law last year, requires the Minister of Energy to lay out plans for creating strategic stocks. But no one knows if the plan, and more importantly its implementation, will precede a global oil supply crisis.

However, the country has made small steps in the quest for oil exploration in the country, which would help out in a global crisis should they bear fruit.

Mr Odinga told Kenyan oil industry players last week that exploration must be made a priority as the world seeks other ways of reducing dependence on oil.

“Even as living standards for ordinary Kenyans fall, the oil sector is enjoying windfall profits. You must take the lead in ensuring that these profits will be used to find sustainable solutions. Oil exploration must therefore be made an even more pressing priority. But diversification of energy sources has to be the longer term key,” the PM said.

An official with one of the six companies prospecting for oil around the country says that it will take a minimum of three years before any meaningful drilling can begin.

“After the drilling, of course there’s the next issue about transporting if the oil is found in say, Isiolo or Turkana and that will take some more time,” the explorer said. “If commercial quantities are found, then we have to recover our costs before the actual sharing of the oil income becomes a reality.”

Exploration is an expensive undertaking as evidenced by Woodside Petroleum Ltd venture that sunk more than Sh6.5 billion ($100 million) prospecting for oil off the coast of Lamu and came away with nothing.

Scientists who have worked with the National Oil Corporation of Kenya told the Nation that the fact that Woodside did not strike oil at the anticipated well did not mean there were no deposits off the Kenyan coast.

An official with an exploration company said: “The Ministry of Energy has been very supportive and very active, but then the supporting ministries do not seem to understand the importance and the urgency of the exploration.

“It’s frustrating to sit at Treasury from 8 to 5 daily for a week seeking a promised tax exemption or to chase the civil aviation authorities for permission to fly and collect data when we are risking our money to do what will really benefit the country.”

And as the firms and the Government seek ways to resolve such hiccups, the ordinary mwananchi continues to feel the pinch of the rising fuel prices, which have in turn pushed up the cost of basic consumers goods, including food and transport.

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