Conference Hosted by:

REPORT OF THE 2ND TURKANA COUNTY OIL

& GAS CONFERENCE 2016

THE CRADLE HOTEL, LODWAR, KENYA

26TH – 27TH MAY 2016

Written by: Francis Anno & Josephat Lotwel

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Conference sponsored by:

Ministry of Energy and Petroleum

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LIST OF ABBREVIATIONS AND ACRONYMS

Initials Initials in complete

CIDP County Integrated Development Plan - TCG

CSO Civil Society Organizations

DFID Department For International Development

EOI Expression Of Interest

EOPS Extended Opportunity Programme and Services

GDP Gross Domestic Product

ICSID International Centre for Settlement of Investment Disputes

IOCs Internal Oil Corporations

KEPSA Kenya Private Sector Alliance

MoEP Ministry of Energy and Petroleum

PSC Production Sharing Contract

UNDP United Nations Development Programme

TNRG - HUB Turkana Natural Resource Governance - HUB

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TABLE OF CONTENTS

LIST OF ABBREVIATIONS AND ACRONYMS .....................................................................................................2

1.0 PRELIMINARIES .......................................................................................................................................4

1.1 EXECUTIVE SUMMARY ...........................................................................................................................4

1.2 About the Ministry of Energy, Environment and Natural Resources (MEENR)! .......................................7

2.0 OFFICIAL OPENING OF THE CONFERENCE 2016..............................................................................9

2.1 GUEST SPEECHES AND PRESENTATIONS .........................................................................................10

2.1.1 County Minister – (MEENR); Hon. Rhoda Loyor – Written speech. .......................................................10

2.1.2 County Commissioner – Turkana County, Mr. Stephen Ikua ...................................................................10

2.1.3 Governor of Turkana County; His Excellency Josephat Nanok ...............................................................11

3.0 TECHNICAL PRESENTATIONS .............................................................................................................13

3.1 Oil & Gas Value Chains by Anthony Mwangi – Tullow oil .....................................................................13

3.2 Best Practices for Oil Revenue Management for Kenya and Turkana County by Prof. Peter Wekesa. ...15

3.3 International case studies on exploitation of natural resources ..............................................................18

3.4 Turkana Professionals Association (TPA) - presentation by Mark Ekuwam (Chair) ..............................21

3.5 Land rights and compensation in the oil life cycle - by Mrs. Pauline Lokuruka ......................................22

3.6 Social Performance Management - by Muthoni Koinange (SPA Consultant) .........................................23

3.7 Presentations by panelists, plenary questions and answers for day 1......................................................25

4.0 TECHNICAL PRESENTATIONS ON ENVIRONMENT – DAY 2 ............................................................28

4.1 Panelists presentation on environment, oil & gas ....................................................................................28

4.2 Presentation by Mr. Andrew Kamau – Principle Secretary – Ministry of Energy and Petroleum ..........30

4.3 Case study of conflict arising from extractives in Turkana, a presentation by Prof. John Obiri .............34

4.4 Conflict/Dispute Resolution Mechanisms in Extractive Industry by Mr. Erastus Ethekon – UNDP .......38

4.5 Creating & finding opportunities for local content in the oil life cycle – by Mary M’mukindia, ............41

4.6 Role of Civil Society Organizations in Extractives – by Alexander Lama (HUB) ...................................49

4.7 Towards Greater Transparency & Accountability in the Oil Sector by Jeroen De Zeeuw ......................52

4.8 What next for Turkana County .................................................................................................................53

4.8.1.9 Crossing comments from the panelists; including key points from CSOs plenary precentations ............56

5.0 ANNEXES .................................................................................................................................................60

5.1 Main event speakers and moderators .......................................................................................................60

5.2 Key organizations that made presentations ..............................................................................................61

5.3 Event programme for day 1 ......................................................................................................................61

5.4 Event programme for day 2 ......................................................................................................................62

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1.0 PRELIMINARIES

1.1 EXECUTIVE SUMMARY

Oil & Gas conference 2016 was a follow up of year 2015 conference which helped the MEENR, CSOs, Investors

and Community to concretize their efforts to support exploration and drilling of oil in Turkana County. The theme

of year 2015 was ‘Turkana Oil for County & National Development – Let us get it right’. The 2016 conference

was hosted by Turkana County Government (TCG) and sponsored by Government of Kenya - Ministry of Energy

and Petroleum – (MoEP), Tullow oil, UNDP, and Oxfam GB. It was conducted at Cradle Hotel in Lodwar on 26th

– 27th May 2016 and attended by about 527 persons with senior most being: The Governor - Turkana County,

Principle Secretary - Ministry of Energy and Petroleum; Turkana County Ministry CEC - (MEENR), and County

Secretary – Turkana County.

The conference under the theme “Oil Development Phase; Are We Ready?” equally motivated participation of

many individuals and institutions in Turkana County and other parts of the country which included oil and business

investors, policy makers, Civil Society Organizations, Experts/Scholars and Community/pastoralists. The key topics

under the theme 2016 were: Structure of engagement between the national & county governments in oil blocs;

Creating & finding opportunities for local content in the oil life cycle; Environmental & socio-economic issues

anticipated in the oil life cycle and mitigation measures; The role of civil society in the oil life cycle; Lands rights

and compensation in the oil life cycle; and Best practices that can be adopted in Kenya and in Turkana County.

The conference also focused on proper governance of natural resources, best practices and good examples with

key areas for attention being revenue generation and sharing, sustainability of the sector, and diversity for

purposes of leveraging the sector during times of risk and uncertainty. It also looked into benefits of equity justice

which include but not limited to positive attitude, legal frameworks, and capacities for sustainable engagements

by all stakeholders involved in oil and gas sector or any business venture with gains for the greater good. In order

to ensure proper management of natural resources in any context, worthy noting are: political governance at all

levels, institutionalization of rule of law, transparency, accountability, fostering economic growth, human capital

investments, multi-track expert network, and research and knowledge being appreciated as the backbone of

policy decisions.

Presentation on Land issues was a great motivation to participants who anxiously waited to have their grievances

sorted out. It was learned that the Land law is explicit and if referred to can help guide stakeholders interests on

land issues. Suggested revenue sharing formulae of gains from oil and gas business according to Petroleum Bill

2016 is 10% for local host communities, and 20% for county government. Despite allocating gains to community

and county government, Tullow oil has expansively implemented social corporate responsibility in the key sectors

of humanity i.e. Livelihoods, Health, Education, and community support programming. It was also agreed that in

promoting social performance, Rules of community engagement should be applied which help determine how

businesses should be transacted and so; Free, Prior and Informed consent is a must to do. Also, traditional risk

mitigation, and human rights based approach are pertinent in ensuring systematic engagements with wider

stakeholders.

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Harmonization of investors & community interests is seen to help in reducing disagreements and minimizing

opportunities for conflicts. Since most conflicts are triggered following attempts to access natural resources

therefore, Turkana County resources will be availed for county development based on proper arrangements made

with communities and their gatekeepers. Also, state regulations will be used to contribute to guarding environment

from effects of extractive projects. During this conference, the long awaited issue of Turkana land demarcation a

rose which was suggested to be initiated by county government in collaboration with the community and CSOs

for purposes of better land use especially for expanded production though pastoralists’ main production systems.

These primary production systems involve pastoralism and dry land crop farming. Additionally, Turkana land

should be used by the owners as collateral to access other forms of capital for expanded investments (capital

financing).

It was also recommended during this conference that benchmarking and lessons sharing from other pastoral

areas where oil & gas industry is thought to be successful should continue. Women empowerment through

continuous training, award of tenders and taking role in decision making and security provision need be integrated

into the sector. In regard to environmental regulation, the role of NEMA and County Environment and Peace

Directorates need be promoted and respected for purposes of guiding environmental interventions as per the law.

This will ensure sound conservation, protection, and preservation of the environment. Tampering with environment

during this era of climate change should be well informed by environmental friendly strategies (policy supported)

such as land reclamation, compensation, and other rehabilitation interventions such as tree planting (greening the

affected areas). Also strongly recommended as matter of policy is Environmental Impact and Social Assessments

(EISA) which need to well conducted, shared widely and approved accordingly based on stakeholder feedbacks

especially before development phase of oil in Turkana.

Surface and ground water in Turkana need proper management. Over use of it during oil development phase

may deplete water table hence adverse effects to the environment. Management of water resources like other

resources within Turkana County require efforts of all concerned parties being directed towards a common

purpose. On the other hand, steady business competition is the only strategy for maintaining competitive and

comparative advantages in a market dominated by powerful business entities; and Oil and Gas industry is one of

the globes highly dominated and commanded industry. It was also agreed that promoting security in Kenya and

justifying costs attached to assets (reasonably) such as land, natural resources, labour etc. attract investors and

make Kenya’s business bids in the region go through! In order to realize this intention, Oil and Gas companies

should be viewed positively as investors and contractors. They should be supported to conduct their businesses

within the laid down modalities.

It was also recommended that Kenya and business partners to stop looking at the narrow picture and copy/learn

from other countries that have succeeded in oil and gas industry; have diversified their businesses and substantially

built human and physical assets for sustainable development. The government of Kenya has embarked on

reforming petroleum sector to enhance transparency, accountability and predictability, and projects with objectives

and goals towards attainment of vision 2030 strategy. Conflict being a hazard and inhibitor of development

efforts, all stakeholders were requested to understand the effects of conflict to the economy and also to perfect

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strategies to dealing with conflicts in extractive sector. Therefore, Disaster Risk Reduction should be integrated

into Country and County investment projects including oil and gas sector. As to management of stakeholder

relations, relationships matrix should be developed to help create understanding of potential conflicts for purposes

of avoiding and mitigating disagreements before there effects hinder interventions. In addition, information sharing

should be strengthened on: Oil & Gas benefits sharing; profits and taxes maximization; future job trends;

community involvement in interventions; and proactive thinking in dealing with communities. These have a lot to

do in building and sustaining stakeholder relations.

As to diversity of conflict resources in extractive industry, appropriately, dispute resolution mechanisms need be

employed such as litigation, arbitration, expert determination, mediation, negotiation and other mechanisms able

to manage, settle and resolve conflicts. Since most conflicts are based on local content programming, investors

should consider the local content strategic pillars of good governance, linkages and development that are

implemented using a workable roadmap strategy that incorporates capacities, frameworks, policy options,

stakeholder and global business structures, market performance, resource economics and consensus building.

Based on spectacular resources found in Turkana County, in order to expand investments, the county should have

a focused vision on minimizing unemployment and develop adventure tourism through the existing opportunities.

These will help widen the avenues for enriching community gains through diversified interventions towards

community development and support.

During this conference, CSOs maintained call for the government and business investors to be responsible and

efficient in regulating the oil and gas sector. In order to play well the role of ensuring checks and balances, capacity

of CSOs need be built to support execution of their mandate in linking government, investors, stakeholders and

communities in implementation of common projects, foster relations and good transparency and accountability

performance. Turkana County being viewed as one of the richest continues in Kenya (with about 50 products for

investments), there is need to support and sustain local economy through business ventures that will widen gains

from the available natural resources which can be used to enhance tourism, agriculture, pastoralism, trade and

industry.

In consideration to the role that CSOs have undertaken in Turkana County even before devolution, it was

recommended that the role of CSOs in expanding opportunities for education and engagement of pastoralists in

issues of own development need be supported. This will help in strengthening community participation in

minimizing conflicts while fostering development through joint efforts. Owing to the growing fear of pastoralists

since the start of oil exploration and drilling in Turkana County, CSOs despite speaking strongly in favor of

communities, have been equally taking a leading role in sensitizing pastoralists that they will not be snatched of

their land because the oil business takes not larger part of the land. During the conference, all stakeholders were

requested to join hands together in avoiding ‘Resource Curse’ and overdependence on natural resources. This is

done so through expanded thinking and making use of existing opportunities and efforts to grow the economy in

a diversified manner.

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It was also recommended that Turkana County and investors should now adopt a strategy focusing on enhancing

vibrant collaboration and partnerships to make sure the natural resources become a blessing. This will be

sustained by continuous capacity building, adoption of better participatory approaches, and institutional

development. It was also suggested that the Ministry of Energy and Petroleum (MoEP) in collaboration with

Turkana County Ministry of Energy, Environment and Natural Resources (MEENR) to support the building of

social networks to motivate and encourage all boundary partners to play their roles at the right time and at the

right place. Equally, stakeholders are encouraged to do away with the blame game by promoting communication

and consultation especially on issues of possible disagreement.

Through infrastructure and technology development, it was confirmed that Turkana County can build its economy

through capitalization of production value chains. By adopting technology, it will help the county in opening

bordering areas through business and technological transactions facilitated by ICT expansion, inventions and

innovations. In order to facilitate this intent, training and development will strengthen the human capital across

sectors of economy and ability to compete in services delivery. By encouraging the youth enhance their skills, and

creating opportunities to build more capacities; will help facilitate wider solutions to address the current problems.

Therefore, investing in technology and undertaking technology related courses off course with technological

infrastructure, will help the county digitalize its sectors of economy hence season-long efficiency and effectiveness

in services delivery. Specific details of this executive summary are found in the respective sections of the report

which are explained logically and coherently.

1.2 About the Ministry of Energy, Environment and Natural Resources (MEENR)!

The Ministry of Energy, Environment and Natural Resources is one of the county ministries formed to

deliver the mandate of Turkana County Government as entailed in the Kenya’s Constitution 2010 and

other legislations, County Integrated Development Plan (CIDP), and supplementary responsibilities on

Energy, Environment and Natural Resources accorded to by the National and County Governments.

In regard to its Service Charter, the MEENR Vision is to be the best in environment conservation,

technological development, weather forecasting and sustainable utilization of energy and other natural

resources. This is contributed to through its Mission of providing environmental services and sustainable

management of natural resources for social economic development of Turkana populations.

In order to achieve the best results from the contents and processes involve in Energy, Environment and

Natural resources found in Turkana county, the ministry also is mandated to coordinate devolved functions

of the sub sectors involved in the implementation of activities aimed at protecting, conserving and

managing natural resources. This intention is attainable under the backings of: Synergy; Integrity;

Professionalism; Gender and Equity; and Meritocracy as core values.

1.2.1 Core functions

The following are the core functions of the Ministry of Energy, Environment and Natural Resources of

the Turkana County Government as outlined in the County Integrated Development Plan (CIDP):

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Sustainably manage forests resources for socio-economic and environmental benefits

Oil and gas exploration in the County

To increase productivity and enhance efficiency in marketing and utilization of dry land natural

resources

Promote farm forestry, rehabilitation of degraded areas and commercial tree farming

To support conservation of wildlife

To capacity build the community, protect and sustainably exploit natural resources of Turkana

County

To develop and maintain essential infrastructure for effective management of natural resources in

Turkana County

Effective control of Noise pollution

Issuance of weather forecast and early warning for application of various socio-economic sectors

To promote research and appropriate technological transfer for sustainable management of natural

resources including management of invasive species within the county (Prosopis species, etc.)

Promote use of renewable energy and act as interface with local community on oil and gas issues

1.3 Oil & Gas Conference 2016 Agenda

‘Oil Development Phase; Are We Ready?’ was the theme of 2016 oil & gas conference. The agenda to

facilitate learning, consultations and resolutions on the conference theme were:

Enhancing public participation in oil and gas issues as per the constitution;

To update the public on progress made in oil and gas exploration in Turkana county;

To develop a county extractive sector strategy;

Increase local awareness of local content opportunities and build local patriotic unity; and

Promote County and National Government Values and Principles.

In the two (2) days of event, technical and expert presentations, ministerial and departmental statements,

Civil Society presentations, participants’ questions and arguments, and panelists’ discussions and

presentations helped in exhausting the above agenda. The final resolutions on what next for oil & gas

sector are summarized at the end of this report.

1.3.1 Contents of day 1

Guest speeches (CCO, CS, CEC, CC, H.E. Governor, PS)

Update on progress of oil and gas activities in Kenya

Operational update on the planned Early Oil process

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Structure of engagement on oil & gas between national & county governments

Recommended best practices on revenue management

Land rights and compensation in the oil & gas cycle

Expected social performance of oil companies

Plenary sessions on Land rights & compensation key discussants, and Management of

environmental , social and economic issues anticipated in the oil life cycle

Questions and answers

1.3.2 Contents of day 2

Opportunities for local content in the oil and gas life cycle

Report: Case study on conflict arising from extractives in Turkana

Management of conflict in the extractives sector

Plenary sessions: Opportunities for local content, and management of conflict in the extractives

sector

Role of Civil Society in the oil life cycle

Enhancing transparency & accountability in the oil & gas life

1.3.3 Process/methodology adopted during the conference

Guests speeches

Technical presentations

Sharing of study reports

Panelists/Experts discussions and presentations

Plenary discussions

Questions and answers

Media materials – video documentaries by Tullow oil on oil value chains

Comedies and artists music performances led by Robert Kemei – MC/Moderator

2.0 OFFICIAL OPENING OF THE CONFERENCE 2016

After National Anthem and opening prayers, the official opening of the conference began with the

welcome address from the moderators of the event (Mr. David Ekiru and Mr. James Kuloba) then followed

by brief speeches from the County Chief Officer of the Ministry of Energy, Environment and Natural

Resources (MEENR) Mr. Joseph Epuu, and County Secretary – Turkana County Government Mr. Peter

Eripete.

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Both County Officers expressed Turkana County as the Cradle of human origin, Inclusive County, and

the oil and gas conference (aired on national televisions and local Radio stations) as a product for public

enlightenment and better enhancement of stakeholder engagements.

2.1 GUEST SPEECHES AND PRESENTATIONS

2.1.1 County Minister – (MEENR); Hon. Rhoda Loyor – Written speech.

“It is yet another time when my ministry has organized the second Turkana Oil and Gas Conference. As the

pioneer County where Oil and Gas activities are being realized; I saw the need of ensuring stakeholder

engagements are part of the process. A lot has happened since the last conference that was held last year 2015.

Current and emerging issues include Early Oil, the Petroleum Bill 2015 has passed the national assembly with

proposed amendments awaiting presidential assent, and CESPA has started drilling in Turkana West not forgetting

the oil prices took a dive.

Mixed messages, hope and despair seemed to be the order of the industry. These have had an impact on the

individual, community and Country at large. We have also seen and heard captions from the media which

sometimes leave people with unsettled minds. It is important, in my view, to have platform where these issues

are discussed. The County Oil and Gas conference offers this kind of platform.

We have invited experts and specialists in the Oil and Gas sector, national government representatives, investors

in the upstream sector (Oil Companies), Civil Society representatives, participants from across the county, other

counties with oil blocs and institutions that are engaged in building capacity and awareness in the Oil and Gas

sector.

We intend to have a meaningful stakeholders’ engagement whereby there will be dialogue and open

communication on the current and emerging issues, honest communication aimed at making the engagement

work. We expect stakeholders to see negotiations as equitable and having the capacity to participate

constructively in the process. I would like to express my immense gratitude to those who have partnered with us

in working towards a successful Oil and Gas conference, The Ministry of Energy and Petroleum, UNDP, Tullow

Oil, OXFAM and the organizing committee.

Lastly, I would like to welcome you all to Turkana County, the origin of mankind, take the initiative on site to see

this fast changing county where devolution is making all the difference. I urge you all to actively engage and

participate in this forum to ensure that oil story in Kenya is a success story. Ejok Noi!”

2.1.2 County Commissioner – Turkana County, Mr. Stephen Ikua

Turkana County Commissioner Mr. Stephen Ikua thanked all participants of the conference and all the

stakeholders on the role they play in fostering development in the county. He emphasized the availability of

natural resources that Turkana County can offer to investors as an opportunity for socio-economic development

through production, trade, and industry. Whilst recognizing the inseparability of development and security, the

commissioner regarding Turkana County security status well improved. In terms of development, he said that

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Turkana County has risen; with oil deposits in many places; hunger is fading away as middle class part of the

population is also increasing day by day.

He also said that county ministries are on the right path to producing outputs that strengthen economy

(Agriculture, Livestock, Tourism, and Trade), exploitation of resources for economic development, and people

interacting harmoniously especially when conducting businesses and other sociological undertakings. The national

government commitment to public service has seen expansion of microfinance services even to interior locations

of Turkana County. He gave examples of: Huduma Centre in Lodwar town enabling all to get services at one

point; power connection to all primary schools (90%) in the county, laptops for kids will be distributed to all public

schools; and continuous empowerment of people mainly youth and women through training and employment. He

concluded his speech by saying “Parents and Grandparents didn’t get opportunities to develop themselves; now

such opportunities are available for everybody.”

2.1.3 Governor of Turkana County; His Excellency Josephat Nanok

His Excellency the Governor began his speech by regarding Turkana County as blessed due to discovery of ‘Black

Gold’ (Petroleum). He called on all stakeholders to participate actively in managing the processes involved in

petroleum industry especially at the 2nd stage (production) after oil exploration and drilling. The governor echoed

the need to have Turkana oil reaching the pre-destined international markets though of recent; there has been

great turbulence in the oil industry as geopolitics, competition and falling down of crude oil prices are concerned.

He urged all stakeholders to be interested in the future of Oil & Gas by following and contributing to global

debates for purposes of influencing decisions regarding the industry; especially in Eastern Africa.

The Governor also informed the gathering that the greatest concern in regard to availability of any product for

market is the ‘Quantity’ & ‘Quality’ of it for sound competitiveness! In the broader context, due to discovery of

Oil and Gas in the region, superiority and publicity of Kenya and Turkana County is substantially increasing. He

called on stakeholders’ commitment to continuously and subsequently debate on Laws on Energy, Petroleum,

Natural resources, and Lands because they are coupled with contentious issues. He also reminded the gathering

that the Turkana County Integrated Development Plan (CIDP) is under good use (implementation) in guiding

development initiatives in the county.

In regard to the ongoing debates on Lapset project, Business investments, and Spatial planning of urban areas,

the Governor said that Turkana community now is proving to be business oriented in thinking and in focus. This

move has facilitated rise in economy of middle class earners, rise in awareness on rights, peace building efforts

with neighboring countries, and neighboring internal conflicting communities. The Governor requested the CSOs

– HUB and Government machinery to constantly help in mitigating resource based conflicts and avert intractability

involved.

Turkana land being a pastoral land is dominated by resource based conflicts which have great side effects to

other sectors of economy and humanity spheres. The Governor further narrated that 5 years of oil exploration

and drilling in the Southern and Northern parts of Turkana County have given way to a number of lessons. Among

the crucial lessons are: Different engagements by contractors; and Challenges to land access especially by

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communities who feel their land and resources are under exploitation with little benefits projected to advantage

the community.

The Governor also requested the concerned authorities and departments to look into the emotive land issues

which emanate from disputed aspect of land and environment. He said this can only be counteracted if

stakeholders gather their efforts towards a common direction. In order to make the 2nd phase of oil development

much easier i.e. ease of getting oil, putting it together and transportation; He emphasized that land issues

settlement should begin now! If not, the fear is that the important activities of the enterprise and other county

developments will be derailed. Concerning the Petroleum Law, He said that much has been done at the national

assembly; now watching on how the senate will play their constitutional role especially on contentious issues and

reservations already reported on the same Bill. Clarity on rules of engagement is very crucial to the success of any

business venture.

The Governor uphold need to begin management of processes to guide the county on how to proceed with plans

on extractives and management of revenues coming to the counties as important practices to protect the sector.

He thanked Tullow oil for heightening capacity building within the county through trainings and infrastructure

development. This is evidenced by postgraduate degree scholarships, vocational training scholarships, and He

further extended the need to have government benefitting from such capacity building programmes in order to

sustainably support the process.

As to the need for good roads, the Governor emphasized on the need for Dialogue. He assured the gathering

that the construction of Kapenguria – Lodwar – Nadapal highway road is coming soon off course after

procurement processes which need to be completed effectively as per the law. He said that the road will be

completed because there is no way oil will be transported without good roads. Moving forward as engrained in

the constitution and county government act is achievable if partners appropriately engage in dialogue. This will

lead to effective and sustainable resolutions which will make development programmes move forward smoothly.

It was also reported by the Governor that the debate and standpoints on conservancies in Turkana South were

challenging. Finally, due to combined efforts and harmonization of stakeholders’ interests, a consensus regarding

the conservancies was reached and there are no more major disagreements. In order to enrich stakeholders’

engagements and participation in issues of county development, best practices from other places need be

incorporated. Such lessons and good practices would also help in improving CIDP natural resources section.

In terms of resources needed to achieve the intended development in Turkana County, Ksh. 40 billion is needed

to realize the CIDP annually. He informed the gathering of the notable projects to expand the economy to high

levels if resources and decisions are invested wisely. He wished all participants a fruitful conference with workable

and attainable resolutions during the two (2) days of the Oil & Gas conference. Finally, He declared the conference

officially launched.

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3.0 TECHNICAL PRESENTATIONS

3.1 Oil & Gas Value Chains by Anthony Mwangi – Tullow oil

The Tullow oil representative began by introducing other Tullow team members in attendance. The major

part of the presentation was on Early Oil Pilot Scheme with specific contents: Introduction to Tullow oil;

Kenya in a regional context; The Oil & Gas Life cycle; and the Early Oil developments. Tullow was

introduced as a Global Independent Oil and Gas Company; and a signatory to Extractives Industries

Transparency Initiative (EITI) with a market value of around $4bn.

The company conducts its operations in 22 countries (including 12 in Africa) within its mandate to

‘Explore, Appraise, Develop and Produce Oil & Gas’. In regard to Kenya in a regional context, the Eastern

Africa is becoming a key player on the World Oil and Gas scene. The recent oil explorations show Kenya

having 0.75m, Uganda 1.7bn, Mozambique 10.2bn, South Sudan 1.5 – 2bn, Tanzania 2.5bn barrels of

crude oil. Ethiopia was reported to be under exploration while Democratic Republic of Congo (DRC) is

under Exploration & Appraisal.

The presenter also shared that more than $100 billion will be invested in the region in the next 15 years

and Kenya is well placed to lead the way for East Africa oil developments. In addition, achievements of

Tullow Kenya in oil exploration and drilling in Turkana County were discussed during this presentation.

To begin with, first material oil discovery in Kenya-Ngamia 1 took place in March 2012 and 31 wells

have been drilled since 2012 which include 15 exploration & 16 appraisal wells. The company has

recorded 81% early exploration success rate with over 5,000km2 of 2D and 3D seismic acquired.

The Tullow oil exploration has also led to discovery of mean resources upwards of 750mm and investment

in excess of $1.5 billion incurred to date. In regard to socio-economic investments support, the company

invested Ksh. 609 million while Ksh. 24.2 billion got spent on local suppliers since 2011. From the

extended social corporate responsibility kitty, 75 Kenyans have benefited from the Tullow Group

Scholarships Scheme in which 31 of whom are from Turkana County.

The presenter also shared that Tullow oil thematic areas of support from 2011 – 2016 include: Livelihoods;

Health; Education; Environment; and Community support. Specific to community support, the company

supported community water projects with an investment of Ksh. 150 million in 2014 and 2015 water

programme. In addition, Tullow Kenya donated a Mobile Clinic worth Ksh. 15 million through the Beyond

Zero campaign; supported school feeding programme; camel water; infrastructure projects costing up to

Ksh. 53 million in 2015; and Health infrastructure also costing Ksh. 53 million in 2015.

Tullow Group Scholarship Scheme (TGSS) – Invested Ksh. 159 million for the 31 scholars, and other

Ksh. 44 million in 2015. The company also supported Secondary School Scholarship Program (SSSP)

which involves – Full secondary scholarships for four years. From inception to date, the company

committed Ksh. 64 million to support 55 students. In 2015 alone, Tullow spent Ksh. 15 million in

Secondary Schools Scholarship Scheme.

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3.1.1 Local content

3.1.1.1 Capacity building

In regard to capacity building, the company initiated and supported the women’s training programmes. In

2014, Tullow facilitated the growth of oriented women enterprises (GOWE) training programme for

women entrepreneurs from Turkana County. The local content support also included Lodwar Youth

Polytechnic (Loyopo) infrastructural development support, Light vehicle scheme whereby Tullow

awarded contracts to 40 companies drawn from its operational areas (36 from Turkana) to supply with 40

light vehicles in a contract worth over Ksh. 225 million. Also pumped into the community was enterprise

development fund which targeted groups in expanding their business opportunities.

3.1.1.2 Employment opportunities

The company employed more than 3,400 nationals through the supply chain in the field operations at the

peak of activities in 2014. The percentage of nationals engaged in the supply chain hit a high of 96% of

the total workforce in March 2016. Also, 2,300 people from Turkana County got employed in the field

operations at the peak of activities in 2014, and 62% of the total workforce in the field operations

constituted people from Turkana County which was the highest since operations began (compared to 47%

in October 2013).

3.1.1.3 Procurement opportunities

Local: through TKBV’s contracting and procurement strategies, about $273 million were spent on national

suppliers between 2011 and March 2016. For Turkana County, the contractors have spent about $25.2

Million with local Turkana supplies between 2013 and March 2016. In quarter one of 2016, 15% of the

total expenditure was with local Turkana suppliers.

Through strategic partnerships with Equity Group Foundation (EGF), Lundin Foundation Vocational

Training, Lodwar Technical Institute (Loyopo) & Growth Oriented Women Enterprise (GOWE) were

supported through focus on Suppliers development, EOIs and Tendering awareness sessions, Contractor

on-boarding & Quarterly forums, and through support and integration of Forums i.e. PWG, Turkana Focus

Groups, SOGA, UWA, and RMPCC.

3.1.1.4 Communication, Capability & Capacity assessment

Across all its sectors, the company maintains high levels of accountability and transparency not only to

Tullow oil authorities, regional and national stakeholders but also utmost accountability to host

communities and county government. This is done through monthly reporting on the local content,

capturing of accountability information in the community monthly newsletters, and through publishing of

the local content accomplishments periodically through Local Content Factsheet.

The company also upholds importance of ascertaining capabilities and capacities that exist in the

catchment area. In regard to it, the company conducted a Partial Industrial Baseline Study and as well

15

contributed to studies carried out by DFID, Auditor General’s office and BG Group regarding the industry

and areas of operation.

3.1.2 Oil and Gas Life Cycle

EOPS supported the company in working with diversity of stakeholders as well as supporting community

programmes destined for socio-economic development. As a key enabler for Full Field Development,

EOPS also is helping Tullow oil in establishing an enabling commercial, infrastructural and logistical

arrangements that would facilitate future full field development. It also provided important reservoir

information that will assist planning for the future full field development.

EOPS will also help in establishing an international market place for Kenya’s crude oil at a relatively low

cost with a scope for more preferential price discounts in the future. The presenter also shared that the

EOPS model implemented by Tullow oil enhances the credibility of oil production in Kenya (locally,

nationally and internationally), creates scalable local employment and business opportunities (small

initially but core to full field development), a model with the same intent as Financing For Development

model (FFD).

3.1.2.1 Benefits of Early Oil

This was said to have created a number of businesses and job opportunities which included: Freight

forwarding and logistics; Civil works; Catering; Security; and Warehousing among others. As to training

and vocational skills, the rightful skills to grow the local capacity of communities/people to participate in

the oil & gas industry, and infrastructure development; Kenya Power is currently undertaking several

projects that will increase connectivity to more households in Turkana.

The presenter concluded this presentation by re-emphasizing the role and commitment of Tullow oil in

ensuring that the availability of oil & gas resources in Turkana county and Kenya as a whole through

combined efforts of all stakeholders, government included; will be a real story!

3.2 Best Practices for Oil Revenue Management for Kenya and Turkana County - by Prof. Peter

Wekesa of Kenyatta University.

The presenter began his session by giving an overview of African resources. He said that Natural resources

(such as oil, natural gas, coal, diamonds, minerals, forests and water) are often a major source of national

income, and are also a major cause of conflict and instability if mismanaged or shared unfairly. The

African continent has one of the largest quantities of natural resources including diamonds, salt, gold,

iron, cobalt, uranium, copper, bauxite, silver, petroleum and cocoa beans, but also woods and tropical

fruits. Most of these natural resources (renewable and non-renewable) are undiscovered or have barely

been harnessed.

In 2012 according to African Natural Resources Centre (ANRC), natural resources accounted for 77% of

total exports and 42% of government revenues. Also empirically, for non-renewable resources; Africa

accounts for: About 30% of the world known reserves of minerals, about 10% of oil and 8% of gas

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resources, cobalt, and diamonds, platinum, and uranium reserves in the world. As compared to the

situation in Kenya with a land mass of about 587,000 square kilometers, the Kenyan mining sector is

thought to be small and under-developed and it represents about 1% of the GDP. The minerals found in

Kenya are: 1. Oil in Turkana 2. Natural gas 3. Soda ash in Magadi 4. Diatomite 4. Coal 5. Gemstones in

coast province 6. Gold in Migori and Kakamega. 7. Limestone 6. Aggregate and Sand.

The presenter also shared on the best practices in access and utilization of African resources. He said that

most of the proceeds from African resources go to the West, and lately to East Asia, rather than Africa

where poverty still prevails. The unfair historical experiences of slavery, colonialism and neocolonialism

have continued to perpetuate extractive, exploitative and unequal relations between Africa and the outside

world. In addition, many of the resource-rich African countries have made poor use of their natural wealth.

The cases of Nigeria and Democratic Republic of Congo (DRC) was highlighted as among the mineral

richest countries in Africa, with vast concentrations of minerals but have failed to derive dividends from

them.

He also gave an example of Equatorial Guinea, a small oil producing country having an estimated 75% of

its population living on less than $700 a year, but the country’s average per capita income was almost

$35,000; the continents highest. Ironically, instead of creating prosperity therefore African resources have

fostered: Corruption; Undermined inclusive economic growth; Incited armed conflicts; and Damaged the

environment etc.

He also presented on natural resources and the two ‘Evils’ associated with their exploitation. To begin

with, ‘Resource Curse’ or ‘paradox of plenty’ phenomenon where resource abundance is characterized by

political and economic setbacks that undermine progress and development (Auty, 1993; Collier et al,

2004). Whereas abundance could be advantageous, in reality it inhibits good governance and democracy,

empowers dictatorial regimes to entrench their power and reinforces political repression and conflicts.

According to Alao (2007, p.20) the presenter shared that resource conflicts are fought at five levels: 1)

between and among groups within a state; 2) between communities across national borders; 3) between

citizens and the central governments; 4) between communities and multinational corporations and 5)

between governments.

‘Dutch Disease’ – ‘Resource dependence’ is also associated with revenue volatility. 'Dutch disease'

therefore, is an economic pathology whereby with the booming resource sector, growth of other industries

and sectors is neglected. Capital and revenues are allocated to specific resource sectors that shifts the

labour force away from other industries (including agriculture and pastoralism), a phenomenon that leads

to a devaluation of locally produced goods and foodstuff. Therefore, resource dependency and failure to

invest in other industries and human capital poses a bleak future to economy.

‘Bad Practices-Bad Examples’ was presented and depicted African nations with few exceptions such as

South Africa not escaping the 'oil curse' which denotes political, economic, and governmental and security

non-functionality. Most of these oil dependent nations: Fail to diversify their economies beyond the ‘God

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given natural resources’. They neglect industrialization and agriculture as key drivers of local economies.

They are also vulnerable to global economic shocks especially when oil price plummet. These countries

also have poor policies and poor development of human capital because they are blinded by oil wealth

which benefits the political elites, while the majority of the population languish in poverty.

In addition, central governments have been repositioned as key drivers of growth to the detriment of the

local and private sector. In addition, there has been a persistent erosion of citizens’ duties and obligations

as participants in the local economies and the problem of political instability is blamed for generating

chaos in the management of oil sector.

On the other hand, the problem of ‘leakages’ or corruption because of weak institutions of governance,

entrenched authoritarian rule due to unaccountable governance, intense risks posed by oil related activities

to the people’s health and, in particular negative effects of oil spills on fisheries and the environment are

causing a lot of harm to African economy. It is also noticed that the youth who form the greatest percentage

of Africa's populations are denied opportunities for prosperity due to crippled education systems and high

levels of unemployment. These nations continue to beg for foreign aid as the lifeblood of their economies.

Politically, African oil states are fragile and poorly governed which gives way to former colonial

interferences and meddling from international organizations (the International Monetary Fund and World

Bank). Leaders of these nations oscillate between being presidents, profiteers, kleptocrats or patrons (Van

Wyk, 2007). They use oil revenues to entrench their power, suppress any political opposition and "their

civilian regimes transformed into brutal police states, and aggravating a regional tendency of military rule,

their armed forces turned into praetorian cliques, personal despotisms and veritable reigns of terror"

(Yates, 2012, p. 1).

The presenter further shared that oil rich nations like those rich in mineral resources are caught in conflict

traps - civil wars and silent genocides. Once a country "stumbles into civil war" (Collier et al., 2003, p. 4)

the risk of further wars and conflicts is exacerbated with the legacy of insurmountable atrocities, socio-

economic and socio-political pathologies. Poverty and underdevelopment is the lot of the majority. Some

of these nations are failed states, although their leaders claim to be governing functional states.

Additionally, ecological disintegration characterizes the exploration of gas and oil, given that hazardous

wastes are not well managed and land, wild and aquatic life are endangered.

3.2.1 Righting the Wrongs

Proper arrangements to govern natural resources should include 3 key things:

1. Fairly address the issue of ownership of natural resources: Through balancing the claims of

private ownership, communal and customary rights, and state ownership, and the resolution of

ownership is often the most contested aspect of negotiations on natural resources.

2. Address the issue on the power to manage and develop natural resources: It’s important to

decide what bodies at the national and provincial levels of government should have the authority

to make and administer laws relating to the development and exploitation of natural resources.

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This amounts to the power to control, regulate and manage natural resources and is potentially

more significant than ownership rights in themselves.

3. Treatment of natural-resource revenues: The transparent and fair generation, collection and

sharing of natural-resource revenues can be a determining factor of the viability and economic

development of a given resource.

3.2.2 Best Practices, Good examples

The reality is that very few African countries have generated positive developmental outcomes from

natural resources and South Africa and Botswana are some examples. Outside Africa Norway provides

very positive outcomes in the management of her natural resources. Several political science premises

have ensured that these countries develop best practices in the management of their natural resources:

That resource-rich countries have a malfunctioning bureaucracy and insecure property rights leading to

lower growth outcomes. Also, Institutions matter; when the domestic institutions are “grabber-friendly’,

the benefits of resource abundance are reaped by few elites in alliance with foreign companies.

3.3 International case studies on exploitation of natural resources

3.3.1 Case of Norway

Norway’s ability to avoid the resource curse is attributed to the countries initial conditions that were put

in place (Larsen, 2006). By the time extraction of oil started in the early 1970s it had developed a highly

egalitarian society. Egalitarianism was socially embedded. Norway was also a mature democracy. Norway

also forged a neat tripartite social contract between capital, labour and state elites that made the equitable

distribution a societal norm thus, there were no conflicts over wealth distribution.

Norway institutionalized the rule of law and developed a swift judicial system to detect, determine and

deter theft of official resources. Also in Norway, transparency in public affairs was emphasized through

representation and media scrutiny. Finally, Norway created a Petroleum Fund and accumulated reserves

abroad.

3.3.2 Case of Botswana

When Botswana attained her independence from Britain in 1966, it was the third poorest country in the

world (Kiiza, 2006) with only 12km paved road, two secondary schools and with only 22 having graduated

from University. The discovery of diamond at Orapa (1967) and the subsequent opening up of Juaneng

diamond mines in 1982, the country turned into the world’s fastest growing economy. In 1997, Botswana

graduated into a middle income economy. Today, her GDP is over $14 billion and per capital income is

$8,800.

3.3.3 Provisions in Kenya

The presenter also shared that the principal legislation that will guide petroleum mining in Kenya is the

Bill published in Kenya Gazette Supplement No. 28 of 2014 and passed by the national assembly, with

amendments on October 29, 2014. The Bill, prepared by the technical committee of the Ministry of Energy

after reviewing the Petroleum Exploration and production Act of 1986 is tied to Kenya’s constitutional

provisions on mining. He also shared that within the constitution, all extractable minerals on any land are

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vested in the government subject to any rights the government may have granted any person making it an

offence for any person to deal with minerals without authorization. The Bill proposes the establishment

of the Upstream Petroleum Regulatory Authority (UPRA) and the National Upstream Petroleum Advisory

Committee (NUPAC).

UPRA will regulate the industry while NUPAC will advise the Cabinet Secretary. He further presented

that the Cabinet Secretary according to the constitution is the custodian of the law and is empowered to

grant prospecting rights. In terms of revenue the Bill proposes that the national government will retain 75

per cent of the profit from commercial oil and gas produced, the County government hosting the deposits

get 20 per cent while the local community 5 per cent. This could vary depending on the PSC model.

The Model of Production Sharing Contract (PSC) adopts the R-factor based on the ratio derived from

cumulative hydrocarbons recommended by the World Bank. This is a radical change from the past, where

communities used to get nothing. He advised that the County government should legislate on the

establishment of boards of trustees and the prudent utilization of the funds received.

3.3.4 Equitable Cost-Benefit Sharing

He began presenting this section by posing a question: Does the Bill provide a management and sharing

formula that appear equitable for the communities, national and county governments? He continued by

saying ‘Yes but more is required’. The term equity implies that all people should obtain equal justice. This

term is based on two prevailing principles: public trust doctrine and the principle of permanent sovereignty

over natural resources.

The Bill progressively provides for the establishment of an independent upstream regulatory authority and

a sovereign wealth fund. He reiterated that the Bill should however ensure that equity remains the

foundation of the management strategy around oil production – this would lead to a just and fair society.

The presenter also shared on three key areas that require further attention and discussion. These include:

(1) Focusing more on revenue generation and not sharing; Focus less on excessive oil dependency

because of volatility;

(2) Focus more on stable revenue allocation system-the law alone is not enough; and

(3) Diversify the economy and invest more in other sectors like agriculture, industries and human

resources.

3.3.4.1 Benefits of equitable sharing of resources

Promotes positive attitudes towards the exploration and management of natural resources;

promotes partnerships, incentives and benefit sharing to enhance the development and

management of natural resources.

It can also provide a legal and institutional framework for cost and benefit sharing; reduce pressure

and dependence on natural resources by providing employment opportunities for communities by

using natural resources more efficiently and investing in other sectors.

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In addition, it builds the capacities of relevant stakeholders to engage in sustainable management

of ecosystems thus leading to increase in food security and encouraging conservation for current

and future generations.

3.3.4.2 Progressive Strategy for Revenue Management

The presenter shared that this should take care of the cost and benefits accruing from the oil resource

exploitation. It should also take care of the local realities and expectations which include poverty,

marginalization and underdevelopment. Social scientists have noted that expectations can be explicit or

implicit, clear or fuzzy, realistic or unrealistic, evidence based or opinionated (Ojasalo, 1999). In terms of

external costs, He asked the concerned authorities to consider the following: The issue of compensation;

Air pollution; Water pollution; Solid wastes; Human rights and socio-economic concerns; Involuntary

displacement; and Increased social ills need be regulated.

3.3.5 Key Expectations

It was also shared that almost all stakeholders in the oil & gas sector have expectations. These include but

not limited to: Infrastructure development; Improvement of primary and post-primary education; Job

creation for the local community; Improvement of health institutions; Reliable and affordable electricity;

Representation in oil management; Strengthening people’s culture to mitigate social evils; Good land

management strategies; and Protection of the environment and other non-oil sectors. These expectations

can only be met if all stakeholders agree to distribute them according to their areas of focus. He said that

expecting one or a few institutions to meet all stakeholder interests is not practical. It can deplete the

budget as well as causing demoralization.

3.3.5.1 Strengths of this strategy

It allows for the participation of all stakeholders in the economic, environmental, scientific, social

or cultural benefits arising from access and use of extractive natural resources under Mutually

Agreed Terms (MAT).

It will also allow for the creation of Natural Resource Funds (NRFs) that encourages savings and

reduce the impact of commodity price volatility on the economy. This has worked successfully in

Venezuela and Norway.

3.3.6 Other Proposals

Direct distribution: the presenter said, despite the tacit acknowledgement that the state is a large

part of the problem, none of the most popular solutions attempt to take the mineral rents out of

direct state control. The only exception is direct distribution of windfall revenues to the population,

which has very recently been proposed as another way of ensuring communities’ benefit from their

minerals, combat corruption, foster democratic governance, and even address the problem of weak

institutions.

Private ownership: By taking resource rents out of the state’s direct control, privatization to

domestic owners simultaneously fosters the conditions under which governments have an

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incentive to build strong fiscal and regulatory institutions and creates a new set of societal actors

with the potential to demand the ownership of these institutions.

3.3.7 Key Lessons

This presentation was concluded with lessons learned as to the sector. These included:

Strengthening political leadership and governance at all levels (National and County levels);

Leadership should be inclusive and participatory to check violence and conflicts;

Institutionalization of the rule of law and developing a swift judicial system to detect, determine

and deter theft of official resources;

The rule of law must be applied indiscriminately;

Transparency in public affairs should be emphasized through representation at all levels of

governance;

Concerning Right to Information and Education: Citizens should be educated on their rights and

made aware of their claims;

Fostering economic growth: One of the causes of the oil curse is the failure to invest in other

industries and in human capital. Oil discovery should not blind the region not to invest in other

industries;

Human capital improvement especially through educating the youth and empowering them with

employment is crucial for regional progress;

Create a multi-track expert network to include government official (national and local),

development specialists, economists, researchers, lawyers, academicians, environmentalists etc.

to come up with knowledge data banks on various aspects related to oil; and

Research and knowledge should be the backbone of policy decisions; enhance a collaborative

synergy between local, national and regional players to deal with emerging issues of oil

governance and management at all levels.

3.4 Turkana Professionals Association (TPA) - presentation by Mark Ekuwam (Chair)

This presentation was basically to affirm the commitment of TPA in supporting capacity development in

Turkana County by contributing significantly to the need for ‘Knowledge, Skills and Attitude’ for

meaningful services delivery. In regard to capacities evaluation, the organization is doing a lot of analysis

in all sectors of economy in order to come up with a road map on how human capital can play its role.

TPA believes that need for capacity to participate actively in 2nd phase of oil development require

attainment of rare skills crucial for the sector. The presenter informed the gathering of availability of only

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four (4) welders in Kenya specialized in pipeline welding. He said this scenario calls for National and

County governments to encourage professions in choosing right skills to support the oil & gas sector. In

addition, TPA believes that engagements at National and County levels should be more objective as the

organization is determined to be part of the stakeholders to support especially issues that affect Turkana

as a County.

He called for development of skills in all sectors so that the county economy can be well built from all

sectors currently being run by the government and civil society. A plan for implementation is TPA

conducting an analysis of students transcending from one level of education to the other. This will help

identify successes and challenges experienced at each level of education for ease of addressing them!

He also said that the organization with time will support setting up of committees to handle emerging

issues in specific sectors in regard to education and skills development in the county. He also advised the

younger and the growing professionals in attendance, homes or places of work to take on the right skills

required by the economy. He conclude by saying that education and skills play a crucial role in society’s

economic development especially during this era of 21st century.

3.5 Land rights and compensation in the oil life cycle - by Mrs. Pauline Lokuruka

The presentation by Mrs. Lokuruka majored on land rights and compensation in the context of pastoral

areas and natural resources involved. She began by making reference to Article 61 of the Kenya’s

Constitution 2010 which states that the land in Kenya belongs to the people of Kenya as a Nation, as

Communities and as Individuals; making it classified as Public, Private and Community lands.

It was also presented that the land registration Act 2012 shall apply to all land declared as: A) Public land

under Article 62 of the Constitution, B) Private land under Article 64 of the Constitution; and C)

Community land under Article 63 of the Constitution and any other written law relating to community

land. She presented “Customary land rights” as rights conferred by or derived from Kenyan customary

law whether formally recognized by legislation or not.

Also referenced during this presentation was Articles 60 and 10 of the Constitution of Kenya which gives

a good foundation for guiding principles and in addition the following could be added:

Vesting of community land in communities;

Affording equal status of titles of community land with any other titles;

Elimination of all forms of discrimination; and

Community empowerment to manage and administer their land.

Mrs. Lokuruka also referred to Article 63(3) which states that any community land shall be held in trust

by county government on behalf of the communities for which it is held. Also, Article 63(4) states that

Community land shall not be disposed of or otherwise used except in terms of legislation specifying the

23

nature and extent of the rights of members of each community individually and collectively. Both

references support need to empower communities in taking lead in issues of own land management.

Mrs. Lokuruka further made reference to Article 63(5) an act of Parliament (as not been created by

parliament) shall enact legislation to give effect to this Article: to provide for recognition, protection and

registration of community land rights; management and administration of community land. It should also

provide for the role of County Governments in relation to unregistered community land and for connected

purposes.

It was also shared during this presentation that Tullow oil has gone ahead and compensated the

communities in the following ways:

Scholarships for Masters Degrees;

Awarding Tenders;

Light Vehicles Schemes( 40 vehicles);

Employment offers to the members of the community;

Training of small scale entrepreneurs in conjunction with Equity Bank;

Restocking the pastoralists depending on the size of their households;

Building of schools, Health Centers and Boreholes mainly at the East and South Sub- Counties;

and

Provision of water to the pastoralists within their areas of operations among others.

3.5.1 Suggested revenue sharing formula

Mrs. Lokuruka also presented that new Petroleum Bill 2016 provides: 10% to local communities where

oil and gas drilling takes place; 20% may go to the County Government for investment in a trust or as

support for future short and long term developments. The decision to utilize the fund can be made by

County Government and the Turkana County Assembly for current and future generations.

3.6 Social Performance Management - by Muthoni Koinange (SPA Consultant)

The presenter began by presenting Social Performance Advisory (SP Advisory) as an integrated Social

Performance, Public Affairs and Strategic Communications consultancy firm which is also a member of

the KEPSA and KCM. She also added that the organization is currently providing support to the Frontiers

Counties Development Council (FCDC), Isiolo County, Aeolus Kenya, Crystal Energy Solutions, and

Underwriting Africa among others.

The key sectors supported by SP Advisory are: Oil & Gas (Upstream), Renewable Energy, Mining, and

Infrastructure. In ascertaining the social impacts of ventures, the action has found out that Non-technical

risks have become a major cause of project delays and failures across the world. In addition, social license

to operate has become a key asset and should be a major priority.

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This presentation also harmonized the diversity of understanding of what a community is! It emphasized

on it being a social unit of any size that shares common values. Some of these common values are:

Religion; Cultural; Traditional beliefs; Environmental preservation; Conflict resolution; and Grievance

mechanism. Business Application was another social parameter to consider because communities are

heterogeneous as one system of engagement does not fit all communities, Use of IEIA/SIA/SEA/SESA

for guidance, and local problems require local solutions.

It was also presented that ‘Business Approach’ will also help in Community profiling, Predict, Analyze,

Assess, Strategize, and support Evaluation & Monitoring of interventions. Concerning public

participation, the involvement of individuals and groups that are positively or negatively affected by a

proposed intervention subject to a decision-making process or are interested in it, EMCA 1999 states that:

“every person who proposes a project is obliged to provide right and accurate information to NEMA and

the public”. Refer to Section 137. Entranced in the Kenyan constitution – Chapter 4- Bill of rights; is the

cornerstone of EIA Process.

She further presented that Rules of Community Engagement determine how every business venture should

be transacted with stakeholders and target groups at heart. Therefore, Free, Prior and Informed Consent,

and Boma/Traditional risk mitigation, and A human rights-based approach are pertinent in ensuring

systematic engagements.

3.6.1 Advice/Lessons Learnt

This particular presentation shared a number of lessons that if adapted will widen and make meaningful

stakeholders participation outputs for the benefit of businesses at hand. The key lessons learned are:

Understand you are a guest;

Respect;

Transparency;

Support existing traditional structures;

Help stakeholders understand why and what;

Stay in touch - build relationships;

Own your shortcomings;

Own your stakeholder relationship;

Simplicity is good, Complexity is costly;

Understand before understood;

Smile… let your humility and humanity be seen, and

There are no secrets!

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3.7 Presentations by panelists, plenary questions and answers for day 1

The table below summarizes the questions and answers of key questions asked by participants either to

panelists and /or technical presenters during day one of the event.

Questions/Comments Responses/way forward

Investors and communities

interests as far as

construction of roads is

concerned

Through stakeholder participation, stakeholders and communities

interests would be harmonized and in a way made not affect the

investors and community projects.

The plan on cess collection

on Turkana County natural

resources for infrastructural

development

Turkana resources should be used for Turkana developments. Prior

access to such resources, agreements with communities and all

stakeholders will be developed and agreed upon.

Need for roads to old towns

like Lokitaung

The government is committed to building roads to key towns in

Kenya. In future, towns like Lokitaung will be considered. For now,

the government focus is on the earmarked roads.

County holding land on

behalf of community

Allowed/provided in the Kenya’s constitution 2010.

IEBC Administrative and

Political roles in defining

boundaries

IEBC uses the existing Administrative and Political Acts to define

boundaries. Population is also a factor in determining Administrative

and Political boundaries and IEBC uses the same to fulfill its

mandate.

The effects due to chemicals

used in oil drilling (mud

mixer)

Kenya is a highly regulated country, EIAs are done and approved

before interventions are undertaken. These products are shared

widely and no cases where investors have gone ahead with

interventions without EIAs and /or approved EIAs.

Access to contracts and

investment agreements

between Tullow oil and

Government of Kenya

This can be done through petition in courts of law. However, property

rights and agreements abiding the government and investors are

worth considering.

Need for Turkana Land

demarcation for production

systems, investments and

social development.

The county government can spearhead land demarcation in Turkana

for different purposes. Marsabit county is ongoing with demarcation

of pastoral land and issuance of tittle deeds and licenses for different

investments.

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Plans for oil proceeds, net

gains, risks, and

community share

As per provisions in Petroleum Bill 2016 yet to be forwarded by

senate for presidential assent, the formulae for revenue sharing is

already proposed but can also be petitioned through courts of law for

revision.

The fate of pastoralists /

pastoralism after the oil

business

Oil business is conducted on a small piece of land, the remaining land

can be used for various pastoral activities. In case more land will be

needed, such proposal will be shared with government and other

stakeholders, community included for approval. Only if there is need

for more land.

Need for land during the

next phase of resource

exploitation

The need for more land will be determined by prerequisite

investments and facilities such as pipelines, new oil discoveries, and

other developments in oil & gas sector.

Questions on oil economics

e.g. breakeven, and

disclosure of Agreements

When production and market determinants are stable e.g. demand,

supply, international exchange rates, geopolitics, cost of production

would be used to ascertain a number of economic aspects of oil & gas

industry. For now due to turbulence in oil industry and markets, with

time; the company will be working and concluding on such

parameters such as breakeven points and other economic indicators.

3.7.1 Other details from panelists and participants interactions

To reinforce discussions on county land governance, it was also said that the role of land county

commission on lands comes in only after the boundaries have been set. In addition to the idea of

county holding land on behalf of the community whereby unregistered land is put under the

custody of the county government, this is practical though community have a say over their land

while county oversee how the community wants to access and utilize the land.

One of the overriding questions on land is what the county government of Turkana is doing to

ensure that Turkana people use their land as a collateral towards accessing loans and other forms

of capital! It was therefore agreed that the County Government of Turkana to begin the process of

land adjudication only to settled persons as it’s done in Marsabit County whereby land adjudication

is ongoing.

A number of participants strongly recommend that despite the efforts to promote land use practices

in Turkana County, it should be done with caution because the main production systems i.e.

pastoralism and dry land crop farming are heavily exercised on larger part of the land. The business

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of oil exploration, drilling and even transportation should be well organized not to displace

pastoralists or even affect their livelihoods and other aspects of their socio-economic well-being.

Best practices regarding oil and gas exploration, drilling, extraction and transportation should be

borrowed from other areas/countries where pastoralism is being practiced. This will inform the

context of Turkana and even minimize the challenges involved.

It was also suggested that Tullow oil and other investors should access land through the county

government and Free, Prior and Informed consent from communities and their gatekeepers should

be sourced to give room to discussions on priorities and benefits of the land for the greater good.

This will minimize disagreements and claims that some would benefit at the expense of others.

There was a proposal by a local pastor on local churches being allocated land. This was clarified

by Mrs. Lokuruka that churches, prisons, schools, hospitals etc. are facilities that rest on public

land. Due process should be followed to lease the land to needy churches or such institutions but

it should remain public land.

In regard to chaos frequently witnessed in areas where natural resources are being extracted, it was

also clarified that all stakeholders need to walk the path together by reviewing and perfecting the

systems of engagement, think about realities in an open and transparent manner, and continuously

engage in an open and transparent conversations.

Information on IEBC on whether is responsible for Administrative or Political boundaries was

further clarified using provisions in District and Provincial boundaries Act of 1992 that is indeed

being used by IEBC to define political boundaries.

Referred to was also the ability of Norway, South Africa and Botswana managing issues around

oil industry with support from their respective governments and wider stakeholders understanding

the sector, allocating resources and setting clear goals towards stability and sustainability of

industry. Therefore, if proper planning is done, then dealing with the emerging challenges will not

be a problem.

In order to leverage oil sector during times of uncertainty, there is need to consider investing in

other sectors of economy, supporting human resource training, setting up a science pack,

encouraging tourism in order to get more returns to expand investments among other opportunities

that can support oil & gas business.

It was also suggested that pastoralists be engaged in ongoing development initiatives and their

views right from the grass root levels be documented and integrated into the ongoing engagements.

By so doing, things will not go wrong if everybody is engaged accordingly in the ongoing or

development processes yet to come.

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Pastoralists’ women in pastoral setting and those already doing businesses in towns within Turkana

County need be included in services delivery as suppliers, security agents and workers. Their role

in decision making will support cater for the views and demands of women and other minority

groups from Turkana county.

An observation was made by a participant from Taita Taveta County who compared Turkana

County to other regions where resources were depleted without legislations and forums to discuss

such arrangements. He regarded Turkana County having leeway through the existing legislations

although not comprehensive, can be influenced further for the benefit of the populations. He saw

the on-gong forum (Oil & Gas 2016 Conference) as a best practice in management of resources

and stakeholders’ efforts and grievances.

4.0 TECHNICAL PRESENTATIONS ON ENVIRONMENT – DAY 2

4.1 Panelists presentation on environment, oil & gas

After opening prayers and recap of the previous day’s deliberations, the programme of the day began with

discussions by panel of experts on environment, and oil & gas. The key participants were: Mr. Richard

Kering (County Director – NEMA), Mr. Clement Nadio – (Director of Environment – Turkana County

Government), and Mr. Moses Etelej – (Consultant Petroleum Geo-Chemist).

Mr. Richard Kering began by presenting on NEMA which is a national corporation mandated to coordinate

environmental issues in the county as a lead agent involved in coordinating the work of agencies dealing

with environment. He discussed Environment Act which supports institutions involved in environment

and the county environmental management committees to undertake their constitutional roles. The

coordination of NEMA at the county level is chaired by the CEC of the Ministry of Energy, Environment

and Natural Resources, 15 members from the ministries, technical environmental experts, and 3

representatives from Civil Society.

He further presented that as a matter of regulation NEMA guides institutions/parties active in

environmental issues, supports the implementation of Environmental Impact and Social Assessments

(EISA), and identification of cumulative effects to environment. The corporation also does monitoring

and auditing of environmental projects to ascertain the level of risks and recommending the rightful

actions.

Additions by Mr. Clement Nadio on devolution; made reference to EMCA 1999 amendment which gives

room to all stakeholders to coordinate environmental issues with responsible authorities. He made it clear

that the role of the County Ministry is to ensure sound conservation, protection and preservation of the

environment for sustainable development. He reiterated the need for Environmental Impact Assessments

(EIA) prior the implementation of identified projects; as a measure to guide the environment given that

the proposed interventions have adverse effects to the environment.

29

Mr. Moses Etelej in his discussion began by saying environmental issues are legislative issues and by-

laws are supposed to protect the people, property and natural resources in the environment. Through

regular appraisal of environment and ventures undertaken in it, net compensation on the effects of

chemicals and other aspects of environmental degradation need to be ensured. He called on stakeholders

and environment authorities to appreciate the meaning of environmental audits, their significances, and

he urged the concerned to plan on rehabilitating the degraded environment. All these can be achieved

through working together and motivating the participation of all boundary partners. Mr. Kering and Mr.

Nadio assertions on mitigation and adaptation to climate change brought in a scenario whereby the

Turkana environment is viewed to be under destruction at the time when climate change effects are

worsening.

Reference was made to Turkana County Integrated Development Plan (CIDP) funded flagship projects

geared towards minimizing effects of climate change. These projects include: (1) Greening Turkana, a

flagship project to raise 100,000 indigenous seedlings from nurseries to be planted in different parts of the

county; in which 50% success rate already achieved. (2) Mitigating and discouraging destruction of the

ecosystem in the county by sensitizing the community on the importance of trees, and doing tree planting

in the target areas in the county. (3) The Ministry has banned commercial exploitation of charcoal as a

business. This is done through formulating policies to regulate access to environmental resources. All

these actions are meant to revert and address the effects of climate change in the county.

In regard to water harvesting, Mr. Kering discussed on water harvesting techniques done without

coordination. He also said that NEMA is doing its part in ensuring that pollution during water and oil

drilling is substantially reduced. Concerning waste management, NEMA gives guidelines on how to do

it; including testing the quality of oil. He also said that EISA undertaking is required by the law and the

outputs submitted to NEMA office for the consumption of players and finally approval.

The current challenge with EISA outputs is disseminating the information to populations through radio

and other forms of media to make the information reach the intended public. If properly shared, EISA will

make all stakeholders enlightened on issues to emerge as a result of the proposed interventions hence well

informed approvals made accordingly.

All the panelists affirmed the need to conduct a comprehensive EIA to help in commissioning the oil

production stage in Turkana. There are also a number of issues that need documentation before the whole

process begins! From the earlier presentation especially by Tullow oil, production phase of oil & gas

require adequate source of water. This is feared to deplete the water table causing other challenges to

humans and the entire environment. Therefore, the issue of water should be thoroughly discussed

consultatively to give it the best solution that is friendly to the environment and the interests of wider

stakeholders.

The panelists’ also elaborated on the linkages between and among the environment stakeholders

spearheaded by NEMA and the Ministry of Energy, Environment and Natural Resources. It was

30

recommended that such linkages should be geared towards a common purpose. Cognizant with effects of

chemicals pumped into the environment, it was also recommended that studies need to be done to find out

chemicals contamination in Lake Turkana and other volatile areas within the county in order to find out

the quantities of chemicals already released to the environment for purposes of environmental reclamation.

4.2 Presentation by Mr. Andrew Kamau – Principle Secretary – Ministry of Energy and

Petroleum (Republic of Kenya)

Introduction

The Principle Secretary began his presentation by thanking the organizers of the 2016 Oil & Gas Conference. He

said that it is only in such undertakings that stakeholders get to understand their roles and expected contributions

to the sector. He regarded the forum as a follow-up of what was done previously, what is being done currently,

and will help in determining the direction that the industry would take in future.

He reminded the gathering on steady business competition currently ongoing in Kenya that has seen the country

losing ground to some neighbor countries e.g. the case of oil pipeline from Uganda to Tanzania. The major

justifications given by the government of Uganda on their pipeline decision was on Kenya’s insecurity from

Alshabaab, and possibilities of lack of access to land as Kenyans would price the land so exorbitantly making the

costs of the project too high!

He also said that oil & gas companies work for Kenya as contractors and the revenue sharing is expected to

enhance enterprise opportunities in all areas where oil & gas businesses is being conducted. He referred on the

speed in which things happened during the first phase of oil & gas development leading to some severe levels of

disagreements and disengagements. The PS expects that second round of engagements especially in the

production phase would improve. He spoke on necessary skills required by the industry such as welding whereby

the entire country lacks such special skills required especially at the stage of oil extraction.

He also reiterated the need for Artisan jobs which are in high demand especially in this era of globalization and

industrial development. He asked individuals and institutions to think globally, to be the first in taking advantage

of enterprises and skills side of it, and be very well informed. In order to perfect skills needed by the economy, a

project for skills development through skills gaps analysis need be conducted. He also asked the gathering to stop

looking at the narrow picture and copy/learn from other countries such as Philippines, China, Japan, Nigeria and

others that have trained enough artisans now supporting their extractive industries within and internationally.

4.2.1 Technical presentation

The Principle Secretary presented the functions of the State Department of Petroleum which include:

Acquisition and upgrading of primary data (geological, geophysical and geochemical) in

unlicensed exploration blocks in the country sedimentary basins;

Development and review of Policies, Legal, Regulatory and Contractual Framework for

spearheading upstream and mid/downstream petroleum operations;

31

Development and review of modalities and strategies for licensing of exploration blocks in the

country;

Capacity Development in the petroleum sector;

Overall coordination of upstream and mid/downstream petroleum operations and monitoring of

international oil companies compliance to contract terms and industry standards; and

Ensuring security of supply of petroleum products in the country.

4.2.1.1 Upstream Operations: Exploratory and Appraisal drilling

Between July 2015 and May 2016, Tullow oil drilled six (6) exploration and appraisal wells; Five (5)

wells in the South Lokichar Sub-Basin across Blocks 13T and 10BB and; One (1) well in the Kerio Sub-

Basin in Block 12A. Currently, drilling of Tarach-1 well by CEPSA is ongoing in Block 11A, A total of

seventy five (75) wells have been drilled to date in the four sedimentary basins in the country; therefore,

1970’s – 2010: 32 wells drilled, 2012 to date: 43 wells drilled

Summary of wells drilled (June 2015 – May 2016)

Well Name Well Type Comments

Amosing 5 Appraisal Oil Shows

Amosing 5A Appraisal Oil - Sidetrack

Etom 2 Appraisal Oil Discovery

Twiga 3 Appraisal Oil Shows

Emesek Exploration Oil shows

Cheptuket Exploration Oil Shows

Tarach 1 Exploration Drilling ongoing

4.2.1.2 South Lokichar Field Development

The Ministry approved the Area of Interest (AOI) for the Integrated South Lokichar Field Development

in accordance with the Production Sharing Contracts for Blocks 13T and 10BB. The AOI covers the

already existing nine (9) discovery fields including areas of potential future discoveries.

Appraisal drilling and extended well tests (EWT) results, estimates the recoverable oil in the South

Lokichar at 750 million barrels. Tullow oil has developed and submitted the draft Field Development Plan

(FDP) in December 2015. Currently, joint field development studies between Tullow oil, the Ministry and

National oil are ongoing.

4.2.1.3 Demarcation and Gazzettement of New Petroleum Blocks

The Ministry has created and demarcated seventeen (17) new blocks from the relinquished acreages. It

has also reviewed and revised the existing block co-ordinates, prepared new exploration and co-ordinate

block maps and submitted the new exploration block maps for gazzettement. This will increase the number

of gazzetted exploration blocks from forty six (46) to sixty three (63).

32

4.2.1.4 Kenya Petroleum Technical Assistance Project (KEPTAP)

4.2.1.4.1 Training/Capacity Building

To date, a total of 260 Kenyan citizens from various government agencies have been trained in oil and gas

related courses within and outside the country. A total of $1,664,509 have been spent. Some of the courses

that have been undertaken include:

Petroleum Project Economics and Risk Analysis;

Overview of the International Petroleum Business;

International Petroleum Law Workshop;

International Petroleum Management Certificate Program;

Petroleum Decision Making and Risk Analysis;

Lead Auditor for Health & Safety and Environment; and Oil Spill Preparedness and Response;

among others.

4.2.1.4.2 Consultancies under KEPTAP

i. Strategic Environmental and Social Assessment – SESA (consultant)

Status: Ongoing. Consultant procured since Feb 2016 to Dec 2016.

Objective: Present strategic recommendations for policies, plans, and programs that will guide

environmental and socio-economic planning and decision making in the country.

ii. Institutional Review (consultant)

Status: RFP evaluation stage.

Objective: Undertake functional diagnoses of the Petroleum institutions (MEP, NOCK and KPC) as well

as other agencies; inventory of all legislation and policies and recommend a capacity building plan for

human resources and design of a ‘Petroleum Authority.

iii. Transaction Advisor (consultant)

Status: RFP evaluation stage.

Objective: Support MoEP Negotiation Team on license negotiations as well as other negotiations (e.g.

pipelines, processing facilities, LNG, etc.) related to the development of oil and gas operations.

iv. Public Information Awareness Campaign (consultant)

Status: RFP Stage.

Objective: Support the GoK to develop and execute an effective public information awareness campaign

essential in raising the level of knowledge about the oil & gas industry in Kenya. It will help the public to

better understand the complexities and impacts of the sector, as well as the opportunities it generates.

v. National Communications Strategy (consultant)

Status: RFP Stage.

33

Objective: To develop a strategy and implementation plan for GoK to communicate on the development

of the sector, the management and distribution of wealth, and the opportunities and challenges it generates.

vi. Demand – Supply Side Analysis (consultant)

Status: RFP Stage.

Objective: To conduct a demand and supply assessment of local content opportunities feeding into the

Kenyan petroleum sector, and to determine deficiencies or gaps that could hinder the integration of the

petroleum sector into the broader economy.

vii. Gender Assessment (consultant)

Status: RFP evaluation.

Objective: To identify any potential gender-specific impacts and opportunities of the Oil and gas sector

including how men and women may differently experience risks and benefits of the sector. This study will

look at gender dimensions of the oil and gas sector in reference to access to assets, information, and social

and environmental capital, to identify sectoral impacts.

4.2.1.5 Mid/downstream operations

The Mid/downstream Petroleum sector is charged with the responsibility of ensuring security of supply

of petroleum product both to Kenya and our neighboring countries such as Uganda, Rwanda, Burundi,

Democratic Republic of Congo and South Sudan. The following activities are carried out by the

department to ensure security of supply of petroleum products;

1. Adjudication of petroleum tenders

The Ministry has modeled a competitive mode of procurement of petroleum products known as the Open

Tender System (OTS) in which OMCs access petroleum products at the same landed price. In the last

three quarters, a total of 85 tenders were invited, opened and awarded to winners within stipulated

timelines. The tenders are done every month comprising 3 parcels of AGO, 2 parcels for PMS and 2

Parcels of Jet A-1 to be discharged through Kipevu Oil Terminal. The rest of the cargoes are discharged

through Shimanzi Oil Terminal.

2. Enforcement of Open tender System (OTS) terms and conditions

The department ensures compliance to the Open Tender System terms and conditions by referring

defaulters in the Open tender system to Energy Regulatory Commission (ERC) in addition to removing

them from participation in future tenders.

3. Monitor implementation of petroleum infrastructure development geared to meet the ever

increasing petroleum demand in the country.

VTTI terminal at Kipevu, Mombasa: The department has coordinated several meetings on

operationalization of VTTI terminal so as to expedite the integration of this facility with KPC. A draft

34

Tripartite Agreement is in place awaiting KPC to finalize the procurement process. Integrating this facility

to KPC system will help solve associated constraints.

Further, the department incorporated volumes to discharge at VTTI in the tenders awarded. A total of 7

cargoes were incorporated for VTTI terminal for those OMCs willing to take their products to the facility.

The vessel scheduling committee (VSM) chaired by the Ministry agreed on the principles guiding receipt

of products into VTTI terminal.

Petrocity terminal at Konza: The department continues to support private investments and Petrocity is

one of those facilities. The department incorporated top up volumes for Petrocity terminal in the tenders

awarded between July 2015 and April 2016. A total of 19 cargoes had top ups destined for Petrocity

terminal. Some of the imports have already been received in the terminal. The unit through VSM agreed

on principles guiding receipt of products into Petrocity terminal.

4. Monitoring replacement of Mombasa –Nairobi Pipeline 9 (line 5).

The department has been monitoring the replacement of the 482km 20 inch diameter Mombasa - Nairobi

pipeline. The construction is approximately 80%. The project is on course. The expected date of

commissioning is November 2016. The pipeline will replace the 38 year old 14 inch diameter pipeline and

increase product flow from the current 830,000 litres per hour to 1 million litres per hour. The project

includes the laying of a high capacity (96 core) fiber optic cable. Some of the benefits of the project

include: Security of supply for the country and the region, enhance safety and environment, reduce over

700 trucks at maximum utilization and lastly it will lower maintenance cost.

5. Hoima - Lokichar – Lamu Crude Oil Pipeline

The implementation of this project has delayed due to routing decisions among the Partner States. High

level meetings were held between the Partner States to address the emerging issues in routing. Based on

the outcome of these meetings, GoK will implement the Lokichar – Lamu pipeline (Kenyan part). Plans

are underway to procure a consultant to undertake the Front End Engineering Design (FEED).

4.2.1.6 Conclusion

The Government has embarked on implementation of key reforms in the petroleum sector to enhance

transparency, accountability and predictability in the sector. The government is committed to

implementing key petroleum projects that act as the driver for realization of the objectives and goals for

the vision 2030 Strategy.

4.3 Case study of conflict arising from extractives in Turkana, a presentation by Prof. John Obiri

(Masinde Muliro University - MMUST)

This particular presentation was extracted from a study conducted in Turkana and other areas in regard to

conflicts in extractives. The presentation was meant to make all stakeholders to understand the effects of

conflict to the economy and also to perfect strategies to deal with conflicts in extractive sector. The

presenter began by defining conflicts as ‘A disagreement through which the parties involved perceive a

35

treat to their needs, interests or concerns’. During the presentation, conflict was also regarded as normal

part of organizational life providing chances for growth via improved understanding and insight.

4.3.1 Key findings from the study

Conflict Timelines in showing key conflict trigger events

Year / Time Key Event Linked to Conflict or Conflict Triggers

2010 Jan-June Mine exploration begins

2010 Jul- Dec Oil exploration mast erected and local expectations rise

2011 Jan-June Land sales start around Lokichar region

2012 March President Kibaki announces oil discovery in Ngamia 1 and expectations heighten

2012 Jul- Dec Land plot demarcation along Lodwar - Lokichar road increase

2013 October Communities block roads protesting against Tullow Oil for missing out on jobs

& tenders

2013 Jul- Dec Community Liasion Officers established

2014 Jan-June First Intra-Turkana divergence (North vs South variations)

2014 Jul-Dec Local demand for more information and participation in oil issues

What are the current oil-based conflicts in Turkana County? [19, four > 50%, Nat Gov. vs. TCG, Intra-

Turkana, last six unique]

87

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36

Labour distribution in Tullow oil

Job Category Overall % that are

Foreign

% Non -Turkana

Kenyans

% that are

Turkana

Director 12 42% 58% 0%

Management 134 58% 39% 3%

Skilled 1295 25% 61% 14%

Partial skilled 601 1% 24% 75%

Unskilled 1577 0% 1% 99%

Total 3819 12% 28% 60%

Source: Cordaid 2015

As the years go by the unskilled & semi skill drop off for skilled and management levels

Drivers of the oil-based conflicts in Turkana County – 9; 2 over 50%, last 2 unique

How do the Turkana Views on Conflicts Compare to Other Counties?

[Turkana, Kitui, Taveta, Kwale]

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37

How can conflicts be resolved in Turkana? 8 views, transparency, equity, last 2 in process]

Extractive Industries and Envisaged Future Conflicts

What are the future oil mining conflicts in Turkana County? [13; armed oil cartels; intra-Turkana,

terrorism, ill arms]

4.3.2 Are we ready?

The presenter said in order to answer the question; we need to look at various issues the one most often

forgotten being ‘Disaster Risk Reduction’ efforts particularly disaster preparedness plans. What plans do

we have to counter hazards and disasters etc. Currently Turkana County Government has the best DRR

plans for ‘Environment, Food security, Drought, and Emergencies. Such DRR planning should also

consider oil and gas industry.

We need to know who is likely to have problems with whom and who is not – i.e. a stakeholder relationship

matrix. This will help quell disagreements and forge negotiations and thus strengthen multi-stakeholder

engagements.

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38

Relationship between the various actor (-minor conflict, - -high conflict, +positive, ++ very positive

relationship)

National

Govt

TCG Tullow

Oil

Comm.

Liaison

Officers

NGOs Non

Turkana

Investors

Pokot

locals

Turkana locals + + − − − + − − −

National Govt. + ++ + + + +

TCG + + + + _

Tullow Oil ++ − + +

Comm. Liaison Officers − + +

NGOs + +

Non Turkana Investors +

4.3.3 Are we ready? What interventions should we start with?

The presenter also emphasized on need for enhanced information to the communities on aspects of:

Benefits sharing,

Disclosures of profits & taxes,

Trends of jobs in future,

More community involvement & recognition of investors’ role, and

Proactive thinking on what the communities needs before they come asking.

The above aspects would help create more communication, consultation and resolution of contentious

issues in projects before escalating to fully blown conflicts. In addition, successes can also be achieved

through enactment of Community Land Law, Transparency/ Equity sharing (EITI) and establishment of

Sovereign Fund at all levels.

4.4 Conflict/Dispute Resolution Mechanisms in Extractive Industry by Mr. Erastus Ethekon –

Advocate & Coordinator of the Turkana & UN Joint Programme

4.4.1 Background and Context

The presenter began by sharing on the nature of extractive industry which involves: many international

actors including IOCs, investors and international governments, host governments, NOCs, local

communities etc. Extractive industry also involves multi-billion dollar investments in very complex

political, social, economic and legal systems/environments, thrives on long-term contracts negotiated with

host states, IOCs and local communities and a host of other stakeholders based on mutual interests and

contractual relations.

39

He also added that disputes, conflicts arise out of differing interests, standpoints, values, beliefs and

principles which could be on matters of facts, laws or policies resulting in claims and counter-claims. The

nature of the relationships and the large amounts of money at stake makes disputes within extractives and

any other form of business venture inevitable.

4.4.2 Typical disputes in Extractive Industry

The presenter highlighted the following as disputes in extractive Industry:

Grants of rights to IOCs through concessions and /or petroleum sharing agreements (PSAs) or

contracts

Ownership, access and use of land, oil, gas and minerals

Issues with compulsory acquisitions, compensations & resettlements

Exploration and development of sites (blocks)

Delays in production

Revenue collection and revenue sharing

Expropriations, contractual breaches and forced renegotiation of contracts

Environmental issues – EIAs etc. Legal regulations of the industry under various regimes.

Stakeholders and consultation(s) issues

4.4.3 Dispute resolutions mechanisms

Decisional where parties defer the decision to a neutral umpire: litigation, arbitration and expert

determination.

Consensual where parties resolve the dispute on their own or with the help of a third party:

negotiation, mediation and conciliation. Grounded in the constitution of Kenya 2010 – articles 48

(access to justices) and 159 (2) on alternative dispute resolution and traditional DR mechanisms

(formal & informal).

Judicial authority / power to arbitrate vests in the people and exercised by courts and tribunals

guided by principles of justices for all and use of ADRs and Traditional mechanisms.

Therefore, the choice of the most appropriate method depends on the nature of the dispute and the specific

needs of the parties e.g. need for confidentiality, respect, honor etc.

4.4.4 Litigation in Extractive Industry

Litigation in extractive industry does not differ with that conducted by domestic courts and

involves judges, lawyers, witnesses, substantive and procedural issues, laws and rules.

Prominent during the 1970s in response to expropriations and nationalization of oil and gas assets.

In Kenya: Article 22 locus standi, right to fair trial art 25, and equality before the law art. 27 and

access to justice for all art. 48. Courts and Tribunals.

Benefits: Brings certainty and finality to dispute settlement through final and enforceable

judgments.

40

Downside: could be complex, millions at stake, many stakeholders, require skilled and competent

judges and lawyers, issues with enforcement of judgments, adversarial, parties interests and needs,

costs, corruption, inaccessible, alien, lengthy etc. Not favored in the oil and gas industry but

remains a mechanism of last resort.

4.4.5 Arbitration in Extractive Industry

Parties voluntarily or contractually submit dispute to an adjudication process by arbitrator. Umpire

must have expertise and can render final and binding decision that is enforceable by parties or

through a legal process.

Allows for arbitration between the state and private entities (ICSID).

Provides for party autonomy, neutrality, confidentiality and relative flexibility – allows for choices

to resolve disputes outside the formal court system, choice of law and procedures and choice of

venue etc. hence promotes commercial relationships.

Features:

- Agreement to arbitrate recognized by law (Arbitration Act, 1995);

- Define dispute and the processes to be followed; decision of the arbitral tribunal and its

enforceability;

- Choices of international arbitration institutions e.g. PCA in the Hague, LCIA, UNCITRAL,

ICSID etc.

- Similarity with judicial adjudication e.g. procedural similarities and interface with local

courts. Popular because of the principles of: party autonomy; confidentiality and privacy

of arbitration; flexibility; costs and maintenance of commercial relationships.

Downside: Not that cheap, requirements of disclosure etc.

4.4.6 Expert Determination

Parties by agreement appoint an expert on the subject matter of the dispute who will make final

determination in disputes of technical and complex nature e.g. in Joint Operating

Agreements(JOAs), UUOAs with regard to field extensions etc.

Speed and reasonable costs are considered.

Issues can be segregated into technical and non-technical.

ED not subject to certain overriding legal principles and is based on the expertise of the expert

determiner. He/she carries out investigations, forms own opinion and makes final conclusion.

Only fraud or manifest error can render their decisions a nullity (incentive by one party).

Final decision is enforceable as a contract or judgment in court especially where there are bilateral

agreements except under NY Convention

4.4.7 Mediation in Extractive Industry

Facilitated communication/ dialogue by a neutral party.

It is voluntary and third party provides possible agreeable solution / settlement.

41

KNDR process in 2008. Characteristics: voluntary, confidential, neutral, satisfying outcome.

Advantages: affordability, saves time, easy on procedures, confidentiality, choice of mediator,

freedom of expression, and mutual agreement.

Disadvantages: rush decision, may lack expertise, abuse of process, less dramatic decisions, ability

to withdraw from process.

4.4.8 Negotiation in Extractive Industry

Parties amicably discuss directly and resolve their issues without third party.

Unstructured mode of presenting ones interests, arguments, evidence etc.

Analyze interest of the other party (stand point, evidence, values, beliefs and principles); Plan

actual negotiation – determine expectations, terms, strategies, minimums, important interests and

how to manage the process.

Negotiation techniques: spiral agreements; changing positions; gathering information and

clarifying issues; and making results bigger -alternative proposals.

4.4.9 Other mechanisms

Conciliation – immediately after the conflict. Traditional justice systems / Community justice

systems – localized approaches to attain justice and promote reconciliation and peace.

Use of customs and practices, Close to people, less expensive and saves time. Use of elders and

chiefs as mediators, negotiators, conciliators etc. Compensation and restoration applied.

Declarations and agreements/ peace accords.

Legal & institutional arrangements for dispute resolution in Kenya.

The Constitution of Kenya 2010.

The various laws establishing institutions such as the Judiciary, Arbitration Act, 1995, EMCA,

NCIC Act, Ombudsman’s Office, KNHEC, etc.

Institutions such as the Judiciary – law courts and tribunals

Parliament – Relevant Committees.

Independent commissions – Ombudsman, KNHEC, and NCIC.

Arbitration offices/ Arbitrators under the Arbitration Act. Local Peace Committees & Elders. C

LOs and Local Committees for Oil & Gas Operations.

Security organs and institutions

4.5 Creating & finding opportunities for local content in the oil life cycle – presentation by Mary

M’mukindia, (Founding member –Petroleum Institute East African)

Introduction

This presentation elaborated on the key contents of year 2016 theme of “Are we ready” which covered the

following topics:

Structure of engagement between the National & County governments in oil blocs;

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Creating & finding opportunities for local content in the oil life cycle;

Environmental & Socio-economic issues anticipated in the oil life cycle and mitigation measures;

The role of civil society in the oil life cycle;

Lands rights and compensation in the oil life cycle; and

Best practices that can be adopted in Kenya and in Turkana.

The presenter shared the conceptualized idea (of local content) on creating & finding opportunities for

local content in the oil life cycle. The following are some of the key concept paper quotes and sections

presented to make participants understand fully the topic under presentation:

Concept note introduction

“With the decline in global oil prices, most oil companies have reduced their activities. This has resulted

in many people being declared redundant and reduced economic activity in the oil producing areas. These

issues send mixed messages to the various stakeholders which if not addressed may result in

misunderstanding and slow the entire process of the oil lifecycle. It is owing to this, that the county

government deems it important to hold the second Oil & Gas conference to discuss real and perceived

issues amongst all the stakeholders”.

Concept Note objectives

Objective 2:

To discuss the various opportunities for local content in the new phase. The new phase is expected to

bring up new and intensive infrastructure along these exploration blocs. These are expected to not only

create employment but there will also be an effect on the socio-economic aspects of the community. Where

there is shortage of skills from the local community, the oil companies will source for these skills in the

greater Kenya or even from abroad. If it is not well communicated in advance the skills and services

required from an early stage, it is likely to create a hostile environment with the host community.

Discussing the local content act in length will keep the audience informed and provide an eye-opener for

possible opportunities for investment.

Objective 6:

Inclusivity in the development sector, one of the biggest risks in the oil exploration if not well managed

is the surge of cartels linked to influential people taking the bigger share of contracts and other

opportunities in the extractive sector (Cordaid 2015 report). Turkana County Government is committed

to ensuring a fair distribution of resources and opportunities to her people in line with the constitution of

Kenya 2010. The conference intends to have speakers and panelists who will address the issue and

propose mechanisms the county and country can adapt to make this happen.

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Objective 5:

Learning from best practice, the county government is committed to making the story of oil in Turkana a

success story. Kenya as a country is still learning the ropes of how to successfully carry out oil exploration

in the region, it is prudent to have experts from countries where the success story has been written to give

guidance to Kenya on how they did it.

4.5.1 Local Content in Perspective

As part of introduction to the intent of the topic, the presenter shared the vision of the local content

integration into ongoing extractives. The vision aims at having a county and country capacitated to manage

natural resources wealth. The mission is about working with national government and stakeholders on

Natural Resource Management (NRM) policy formulation and implementation. The Long term goal for

local content integration is development of capacity to improve growth outcome.

4.5.1.1 Strategic pillars

It was also presented that for the local content to be effectively integrated into ongoing initiatives and even

for the benefit of investors and communities, the action should be pegged on the key pillars which include:

(1) Good governance: whereby policy, regulatory and institutional effectiveness, transparency,

accountability and participation, and combating corruption are taken into consideration.

(2) Domestic Linkages: whereby infrastructure development, investment climate, local content

implementation and downstream resource processing are key aspects to achieve local linkages.

(3) Integrated Resources Development: will ensure long term resources vision, integrated regional

resources development, resource mapping, and resource conservation.

4.5.1.2 Defining Local Content

Local content need to be well understood before integration or implementation in any given investments

and relationships contents. Key to note are: Whose Locality? Such as Local community; Sovereign state;

Economic community (common markets); Regional; Global, and Which Content (Inputs/Outputs)? Such

as Human capital; Project finance; Equity participation (Public or private); Technology and engineering

systems; R&D; and Capital goods & consumables - “The totality of (material and non-material) direct

project inputs and outputs that are procured and consumed in the “local” economy and the economic

deliverables therein”.

4.5.1.3 Local content roadmap

The local content roadmap proposed in the concept note / presentation shared during this session

incorporates the following steps:

1. Build capacity to implement: (How ready are national institutions),

2. Assess national capability to implement policy frameworks: (estimate levels of risk, build capacity

to implement),

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3. Analysis of policy options and trade-offs: (cost-benefit analyses, jobs vs revenue, high vs low risk),

4. Assess investor strategies and track record and leverage: (know your partner, assess areas of

convergence and divergent),

5. Review of global industry structure: (global supply networks, who leads, who follows, what is the

country’s comparative position),

6. Analyze national market, clear targets to achieve: (capacity and performance benchmark),

7. Uunderstand project/resource economies: (capacity of the natural resource to sustain the vision),

8. Agree on a national vision and maintain consensus: (e.g. Create employment, springboard R&D

capabilities or establish financial hub),

4.5.1.4 Selecting A Sustainable Policy Option

In regard to policy options selection, the presenter shared with participants on some key facts for

consideration when selecting policies as highlighted below:

No single universally acceptable option;

National development vision key reference point;

Prescription unsustainable;

Incentives more sustainable;

Tension between local content & principle of open local market; and

National and corporate indifference to local content not an option

4.5.1.5 Desired Goals & Arguments in Favor of LCRs

Macroeconomic & short term: strengthening demand directed to the domestic market &

employment expansion.

More specific focus and long term perspectives: Diversification of the industrial sector;

Development of technology-intensive sectors and high growth potential; Build relevant segments

to enhance national security.

4.5.2 Arguments Against LCR

Policy inhibits benefitted sectors from becoming more competitive vis a vis ‘foreign’ (non ‘loco-

local’) suppliers;

Consequent trend is then reduction of investment in R&D and innovation;

Costs associated with the acquisition of inputs increase; and

Resulting disincentive to further investments by foreign (or non-loco-local’) suppliers.

4.5.3 Various opportunities for local content in the new phase

Important to understand Oil & Gas Life cycle and its time lines;

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Early Oil Pilot Scheme the next opportunity but ‘go ahead NOT till June 2016;

Development Infrastructure and Logistics dependent on FID & NOT yet approved till 2017 (est

peak workforce 6000+) will enable the construction of: production wells, well pads; production

drilling, central processing facility, pipelines, construction facilities and permanent facilities, and

Waste facility & treatment. The size and scale is significantly greater than it is in the E&A Phase,

as are the infrastructure and logistics requirements. Minimum work force work & supplies during

greater production period.

National LCR Policies in Effect for the Oil & Gas Sector

Country Legislation/Policy Year Enacted Focus

Brazil Local Content

Legislation

2003 Oil Concession

Trinidad &

Tobago

Local Content & Local

Participation Framework

2004 In-country Fabrication

Kazakhstan Law & Republic of

Kazakhstan : 223-IV

2009 Procurement & Services

Indonesia Local Content Rules 2009 Procurement of domestic inputs

Nigeria Local Content Act 2010 Indigenous participation and

domiciliation of oil & gas activities

4.5.3.1 Local Content Norway (Have NORAD)

Focused in the production chain not in the sector;

The Norwegian government could add local companies in the operators’ list of suppliers;

The more the operators contracted with Norwegian suppliers the greater their chances in

subsequent biddings

4.5.3.2 Local Content Brazil (Have Petrobras)

Focused on the Oil &Gas sector;

LCR set by the Government in concession bidding notice;

LCR based on percentage of local inputs;

Requirement of certification of LC and audit of reports;

No sunset provisions

4.5.3.3 Local Content Australia

Initiated to promote the development of a sustainable local industry without violating international

obligations on trade and competition;

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The incentives includes: Empowering domestic suppliers to partner and cooperate in small

enterprise (weighted 30% of the minimum achievable 15% elevation);

Achieving certification OHSAS 18,000 or SMK/ISO 14,000 (weighted 20%);

Contributing to community development/corporate social responsibility (weighted 30%)

4.5.3.4 Local Content – Trinidad & Tobago

Local content - Maximizing the level of usage of local goods and services, people, businesses and

financing;

Local Participation - To increase local value-capture from all parts of the Oil & Gas value chain;

Local Value Added - Defined in terms of ownership, control and financing by citizens

4.5.3.5 Local Content – Nigeria (have NNPC)

Vision: To be the tool for industrialization of Nigeria, through encouraging indigenous

ownership of assets in the oil and gas industry.

Mission: Opening the oil and gas industry to involve the Nigerian people; Cementing access to oil fields

for higher productivity; and Building industries capabilities in Nigeria to support increased.

4.5.3.6 Local Content in Nigeria: Gaps & Constraints

Dearth of Finance; Deficiency of Technical Capabilities;

Lack of Political Will;

Capital Flight: >$380b estimated in 30 years;

Loss of Employment: >10m direct & indirect jobs exported;

Loss of Investment, Perhaps due to Uncertainty.

4.5.4 Nigerian Successes

Nigerian Content Joint Qualification Standards;

Electronic platform for capacity building & monitoring functions;

Established Nigerian Content Development Fund (NCDF);

Increase in in-country fabrication tonnage;

Over 50% by weight of total fabrication in local yards;

Deep water port establishment in major upcoming projects;

100km of made-in-Nigeria pipeline by Exxon Mobil;

Developed indigenous Marine Vessel and Offshore Assets Acquisition strategy;

Over 5000 employment opportunities created;

Over 85% total Engineering man-hour

4.5.5 Petroleum competition in Kenya

Giving guidance to Kenya

Legislation on LCR imminent;

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Turkana County with estimated 80% poverty levels yet also with unique and spectacular natural

habitat & wildlife can have ‘own approach’ as bordered by: Uganda to the west – oil discovered

in 2006; South Sudan to the north – Oil’s been in production for decades; Ethiopia to the northeast

– exploration ongoing; Lake Turkana to the east - prospective exploration area; To the south and

east, neighboring counties in Kenya are: West Pokot – No exploration taking place perhaps due

to insecurity; Baringo - ongoing exploration activities; Samburu - No exploration taking place

perhaps due to insecurity; Marsabit County is located on the opposite (i.e. eastern) shore of Lake

Turkana – ongoing exploration; Turkana itself exploring in 10BB, 13T, 11A, 11B, 10BA, 12A

covering an acreage of more than 50,000km2. CEPSA about to drill and blocks 10bb & 13T have

750 million barrels of crude oil.

4.5.6 Turkana’s Strengths

Historic archaeological importance;

Cradle of Mankind (most significant archaeological pre-and-early manhood found in Turkana);

“Turkana Boy” Site (1.5 million yrs skeleton of near complete Homo erectus);

2,000 yr old ‘Standing Stones’, impressive prehistoric remnants revered as important ceremonial

site at Namortunga;

Oldest ever traced stone tools estimated at 3.5 million yrs;

Houses Turkana Basin Institute, a research center and a field school led by world famous

paleoanthropologist, Dr. Richard Leakey

Nature, Adventure & Wildlife;

World’s biggest permanent alkaline desert Lake (‘Jade Sea’);

Miles of palm finged, unspoiled sandy beaches;

3 crater lakes and Central Island National Park (5 sqKm) – world’s largest Nile crocodile breeding

ground;

Wildlife – elephant, lion, leopard, cheetah, Oryx, gazelle, topi, greater kudu, reticulated giraffe,

zebra, warthog, kori bustard, hippo, striped hyena, silver-backed jackal, pelicans, flamingoes,

waterfowl, tilapia fish, massive crocodiles and thousands of bird species some rare: Sand dunes

(over 40 ft), Rock climbing

Natural Spas;

Giant natural spa of slightly alkaline waters;

Mineral spa fed by hot waterfall (Kapedo, foot of Silali Volcano)

Unique Culture, People & Products:

Fearless, resilient, renowned warrior nation;

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Annual 3 day ‘Peace Festival’ at Lokiriama in Sept commemorating 42 years old peace treaty

between warrior nations of Turkana, Toposa, Karamojong & 3 other neighboring tribes (from

Kenya, Ethiopia, Uganda & South Sudan countries);

Skillful, beautiful basketry from dried Doum palm leaves.

Turkana expanding on a two-pronged approach

1. Having a focused ‘immediate’ vision on unemployment - specifically oil & gas cum security for: Kenya,

Uganda, Sudan & Congo (later Mozambique). This will make available: - Drivers, Fitters, Rough necks,

Welders, Painters, and Security – ‘para military’ even to hire to the region.

2. Development of Adventure Tourism due to opportunities for Turkana being: ‘Origin of man’ - Historical

global archaeological site, Sand dunes, rally & sking, Rock climbing, Natural Spa’s, Lake Turkana &

Beaches, Animals & Birds, Unique culture & people, “Peace Festival’.

Means of achieving expansion

1. Jobs:

Facilitating immediate term on development of “skills’ schools (technical & vocational skills), Partnering

with TVET, Fast-tracking diplomas & degrees in (petroleum-engineering, geology, physicists,

geochemistry; Hospitality – chefs, F&B, housekeeping, guides-adventure, masseurs, beauty etc; Medical

– nursing, emergency, physio; Security – camps, guides, adventure, border, instructors, survival training,

2. Tourism:

Focus on attracting investors for development of unique tourist attractions – ‘Cradle of mankind’; Lake

Turkana, Sand dunes, Beaches, Waterfall Spas, Hot water spa’s, Peace Festival, wildlife e.g. Crocodile

breeding ground, South Island National Park, Lake Turkana bird-watching, Marketing of Turkana region

as a unique and exceptional melting pot of adventure, ancient warrior nature & unique, spectacular

‘mother earth location where time stood still’; Maintain Turkana’s peoples unique culture, way of life as

pastoral community as this is the lifeblood of the community

4.5.7 Other important considerations on expanding Kenya’s growth

Infrastructure, infrastructure, infrastructure (roads, electricity, telephone, internet, water, security,

airport, housing, bus terminus, Laws, administration of justice)

Conducive business investment climate (Trust, speedy approvals of permits, licenses, reasonable

county charges (Tax, rents, permits etc),

Clear engagement framework for all (nondiscriminatory practices, predictable system),

A willing and ‘ready to learn’ work force with a strong work ethic

4.5.8 Other ideal considerations for Traditional “Local Content”

State and/or citizenry participation in petroleum activities

Provision of goods and services by local entrepreneurs

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Training and employment of citizenry

Technology transfer

Other aspects to Maximizing ‘Local’ Comparative Advantages

Historic global archaeological importance

Nature, Adventure & Wildlife

Natural Spas

Unique Culture, People & Products

4.6 Role of Civil Society Organizations in Extractives – by Alexander Lama (HUB)

The presentation was began by describing Civil Society Organizations (CSOs) as not-for-profit

organizations working outside the government to improve the welfare of the community. This is ensured

by community organizing itself in a way that enables them to pool their resources together so as to solve

common problems or needs (i.e. physiological, spiritual, etc.). Some CSOs work outside their countries

of origin as local and national CSOs, Self-help groups, CBOs; local and international NGOs, FBOs,

Associations, trusts, resources users association etc.

4.6.1 What is the role of CSOs?

The presenter said the major role of CSO is generally to advocate for the rights of the community: raising

their voice. Because CSOs have limited resources to achieve the objective of improving people’s lives

they use advocacy to achieve this objective whereby community engagement to create awareness or raise

consciousness is a key activity in advocacy.

In extractives, CSOs in the umbrella of HUB, carry out advocacy on three wide ranging issues in this

development phase: maximization of benefit to the community. In development phase the sources of

benefits are local contents (employments, supplies contracts and CSI); Negative impact, caused by

pollution and depletion of environmental resources are eliminated, reduced; Loss of land is eliminated,

reduced, or compensated.

Call for the government to be responsive and efficient in regulating the sector is highly advocated by the

CSOs. Provision of such services as health care, education, food distribution, etc. is not the role of CSOs.

In summary CSOs play the role similar to the one played by opposition parties i.e. to hold the government

and other duty bearers in check.

4.6.2 Who are the target of advocacy and why?

Target of advocacy are people or institutions which have power to make decisions that affect people’s

lives. In this case the government and Tullow oil. The government is highly targeted because it has the

obligation, power, resources and influence to protect the rights of the community. In the human rights

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framework it is in the first instance the State that has the principal obligation to respect, protect and fulfil

people’s rights.

The presenter also said that community benefits should be maximized through consideration for local

contents as a way of compensating them by; Favouring local-locals in the consideration of employments

and supplies contracts; Use better approach to identify CSI projects (not the approach of using DAC which

was influenced by politicians; consult widely – no repeat of NRT & Willie Robert conservancies; and

fund mega projects instead of micro projects among other provisions.

Loss of land to mineral prospectors and land speculators; compensation for the loss of land (recognize

traditional land ownership system); shrinking of rangelands until pastoralism becomes no longer viable

means of livelihood as pastoralism thrives in large land mass. Kenya as a country has history of bad

governance as characterised by passing of bad laws which tend to prevent the community from getting

adequate benefits from oil and gas production process, thus making it a curse rather than an avenue for

coming out of poverty and underdevelopment.

Petroleum Act and the just passed Petroleum Bill are examples of bad laws as they bestow all power on

cabinet secretary (CS). There are no checks and balances in the licensing process. The CS absolute power

in this process is not consistent with the best practises because of CS absolute power given by Petroleum

Act. The production sharing contract (PSCS) between Tullow oil and Kenya National government on

block 10BB and 13T to date is kept secret.

When PSC is shrouded in secrecy the community is denied an opportunity to input on how negative impact

can be avoided and also it will not be possible for the community to monitor the violation of the terms of

agreements in the contract. The bill does not even establish a fund for community compensations or

community development agreements. CSOs should lobby for the petroleum bill to include public and

county government participation and for clauses requiring business to be conducted in a transparent and

accountable manner.

4.6.3 Environmental degradation

Environmental social and impact assessment (ESIA) to be conducted in this phase should be done

differently from the past with wide and meaningful consultations conducted with the community. Some

environment issues that CSOs should be concerned with include: Overconsumption of environmental

resources such as sand, quarry stones, trees, etc. which will result in depletion of natural resources, noise

pollution and other public nuisance; air pollution.

Mitigation measure that CSOs should advocate should be characterised by anticipation and avoidance,

minimization and compensation. For example, massive afforestation programme should be initiated to

reduce depletion of tree vegetation cover; a good waste management programme should be designed

(especially the one that takes recycling or re-use into account); dangerous gorges and gullies created by

excavators should be filled.

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4.6.4 The Challenges that CSOs face

Oil and gas advocacy is a difficult, delicate and risky affair especially because you have to deal

with the government which wields a lot of power and has many resources for dealing with people

who are standing between it and its interests. You also have to deal with the oil company which

also has a lot of resources and can hire very smart lawyers. Therefore CSOs also have to have a

lot of resources to be effective in their advocacy which they do not have. However, CSOs can

comfort themselves with the fact that they have the community behind them.

Limited resources can also make CSOs vulnerable to bribery and they may be bought by the offer

of funding to keep silence to compromise their stand. However, it’s not always that the funding

from oil company is meant to bribe CSOs to silence. Some funding may be done because the oil

company is genuinely concerned with the conditions of the community or they want to repair the

damage they have done or they just want to do the right thing that will enable them to carry out

their operation smoothly.

Another challenge is that some organizations do not have advocacy skills and this usually result in

CSOs only scratching the surface and not achieving their objectives. In such cases, community

become disenchanted with the organization and not give it their support in future. There are also

CSOs who are involve in advocacy just to be relevant or to attract funding when they do not know

what is at stake or their argument is not based on facts or they base them on rumours and hearsay

rather than basing them on facts from reliable sources. Such organizations do not know whether

the advocacy issue has been addressed well. There are also those who are used to making noise

that they continue to make noise even when the objective has been achieved.

4.6.5 Conclusion

CSOs play the critical role of a watchdog in oil and gas extractives, whose key characteristic is advising

stakeholders through lobbying. The pertinent issues in this industry are: maximization of benefits going

to the community which bears the brunt of negative impact; loss of community land thus shrinking the

range land which might lead to community losing their livelihood; making bad law that make oil and gas

production a curse rather than a blessing; and Pollution of environment.

CSOs therefore should not be perceived negatively because they only raise the concerns of the people.

Once the duty bearers (i.e. the government and Oil Company) respond positively to these concerns the

relationships between them and the community will improve. Government, for example will get support

to remain in office and Oil Company will operate smoothly.

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4.7 Towards Greater Transparency & Accountability in the Oil Sector in Turkana County –

presentation by Jeroen De Zeeuw

In regard to Transparency, the presenter defined it to mean access to information that is translated in

format and language that every citizen can understand; and so the perception of quality of intentionally

shared information from a sender is likely going to verify accuracy, reliability and the impact of the

resultant actions. In addition, Transparency is therefore practiced in companies, organizations,

administrations, and communities. It can also mean operating in such a way that is easy for others to see

what actions are performed. The essence of Transparency is to guide organizations decisions and policies

on the disclosure of information to its employees and the public, or simply the intended recipient of the

information.

Operating in Accountability on the other hand means all duty-bearers, leaders in particular, need to explain

and be answerable for their decisions and actions, and hold responsibilities for everyone, including

companies, civil society organizations, government, and communities! In ethics and governance,

accountability is answerability, liability, and the expectation of account which is highly promoted at

organizations levels either public, corporate or even charity based. In consideration of the two

terminologies, the presenter added that ability to provide right information and willingness to

acknowledge and take responsibility for actions taken should be key in guiding the intents of businesses

and interests of stakeholders through integration.

4.7.1 Benefits of Transparency and Accountability in the Oil Sector

Increased government effectiveness;

Reduced corruption;

Makes business easier;

Attracts new (and more) responsible investors

4.7.2 Practical Tools / Mechanisms

In general: leadership is critical and no accountability without public participation

Local: This involves Community Driven Development (CDD); Participatory budgeting; Budget

monitoring, public expenditure tracking, social audits; Citizen report cards/community score cards;

Community Development Foundations, Trusts etc.

National / international: Open Government Partnership (OGP), Extractive Industries Transparency

Initiative (EITI). It’s not about money, but doing things differently!

The presenter concluded the session by encouraging proper understanding of Transparency and

Accountability and exercising integration into services delivery. He emphasized that the need for

information should be justified because some information requested may not be relevant to recipients or

even uninterpretable. Having information at hand coupled with willingness to account for actions taken

will always be a uniting factor towards vibrant stakeholders’ engagements.

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4.8 What next for Turkana County

This session like other panelists presentation was an opportunity to brainstorm on the future of Oil & Gas

industry in Turkana County. The panel members were Mr. Joseph Epuu (CCO – MEENR), Eliud Emeri

(Chair – HUB), Professor John Obiri (MMUST), Rhoda Loyor (CEC – MEENR), Sammy Ekal – (PM-

Tupado), Mark Ekuwam (Chair – TPA) and Mathew Logurale (CCO – Ministry of Tourism, Trade and

Industrialization).

4.8.1 Outcome of the discussion

4.8.1.1 What the ministry is doing to harness these opportunities?

This question was directed to the Ministry of Tourism, Trade and Industrialization. From the

responses, it was made clear that there are a lot of opportunities and resources in Turkana County

that can be built on through investments to support the local economy.

The ministry has already marked about 50 products for tourism to mention a few: Lake Turkana,

Central highland, Lokiriama Accord, and Waterfalls. The diversity of the nature makes Turkana

more spectacular. Lodwar town despite being one of the growing towns in Northern Kenya has

got challenges especially in meeting the demands for tourism sector.

Existing hotels bed capacity is too low, there are no world class hotels and investors are requested

to come to Turkana to invest. Currently, two (2) county hotels with capacity of 80 beds each are

under construction although more has to be done on the same.

Wild life protection and conservation is another window for economic development of the county.

This is reinforced by improving infrastructure i.e. roads, airports for tourists to easily access

Turkana destinations. So, the features available in Turkana have got huge economic value that can

support growth of local economy.

4.8.1.2 The role of local NGOs in supporting pastoralists’ welfare?

This question was directed to TUPADO on behalf of other Local NGOs in Turkana. The responses

given were: Local NGOs are involved in programmes that support pastoralist access to natural

resources, rangelands, water, livelihoods, small scale agriculture, fodder production, small

businesses in order to sustain their production systems as well as afford other necessities from

livestock.

A number of Local NGOs are involved in Peace building and conflict mitigation especially in

border areas of Turkana County. He said that the ongoing capacity building of pastoralists through

numerous programmes is to make them experts in managing their production systems (pastoralism

and dry land crop production) and community sociological issues.

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Local NGOs are committed to serve pastoral communities by implementing strategies that have

solutions to their pressing problems. The notable challenge facing pastoralists is the growing food

and income insecurity. Action research proven techniques and microfinance models are being

implemented widely to leverage pastoralists from effects of poverty.

In regard to the current oil business in pastoral lands, pastoralists are very much concerned with

the fate of their land which is now being used for other purposes other than pastoralism. Grazing

land is now converted to oil field. The growing fear is one day being pushed to peripheral areas

which are insecure. Local NGOs are part of sensitization of pastoralists that they will not lose the

land because the drilling area is small.

4.8.1.3 Avoiding the natural resource curse

This question was direction to the Chair – HUB. He said that participation and collaboration are

good practices which were well employed during exploration and drilling of oil in Turkana.

However, other than focusing a lot on exploration and drilling, the HUB Consortium for the last 3

years focused much on social accountability. It worked with local communities in making them

fight for their rights. In order to make oil and other natural resources more of a blessing to Turkana

County, studies need to be conducted on public participation, devolution and management of

extractives.

Unrest witnessed in the last 2 years depicted lack of preparatory works such as community

sensitization, Free, Prior and Informed consent before local resources including land was accessed.

Therefore, the strategy now should focus on enhancing vibrant collaboration and partnerships to

make sure the natural resources becomes a blessing. This will be sustained by continuous capacity

building, adoption of better participatory approaches, and Institutional development.

4.8.1.4 The role of the Ministry of Energy, Environment and Natural Resources

This question was directed to CCO for MEENR who said that as a key ministry in oil & gas, the

game to be promoted is that of every individual interacting with each other repeatedly according

to the rules of the game! Interests should be for the common good and the success of the oil & gas

sector. The ministry will support the building of social network to motivate and encourage all

boundary partners to play their roles at the right time and place.

The ministry is committed to being part of the solution to challenges facing the sector. Issues of

land and community demands will be handled together with the right stakeholders. He also said

that building trust with each other, focusing efforts to building local institutions to support

community services, and promoting peace even during severe cases of disagreements will

encourage all stakeholders in moving forward towards the realization of common goals.

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Stakeholders are encouraged to do away with the blame game by promoting communication and

consultation especially of issues of possible disagreement.

4.8.1.5 Role of technology and professionals in peace building

This question was directed to the Chair of TPA. He began by saying that the primary role of TPA

is to improve the welfare of Turkana professionals, driven by Vision 2013 goal of creating

prosperity across the country through social, economic, and political pillars. TPA therefore focuses

majorly on Social and Economic pillars. Through infrastructure and technology, Turkana County

can build its economy through capitalization of production value chains.

Training and development in the county will strengthen the human capital across sectors of

economy and ability to compete in services delivery. By encouraging the youth enhance their

skills, and creating opportunities to build more capacities will help facilitate wider solutions to

address the current problems.

It is apparent that technology is moving on and it is used in different stages of value chains. By

adopting technology will help in opening bordering areas through business and technological

transactions be expanded further by open economic space through ICT expansion.

4.8.1.6 Role of the County Security System in safeguarding the resources

This question as directed to the County Security Advisor. He began by saying that Turkana County

is committed in safeguarding security of Turkana and her natural resources from exploitation and

misuse though security is not a county government mandate.

Considering County legal frameworks, structures have been established by law to give county the

space to foster its security e.g. through community policing system of ensuring secure living. He

added that the link between county and national government is well strengthened through constant

sharing of information and the local security force guarantees county security assurance.

The county security apparatus with national government support is facilitated by authentic

intelligence services which is shared across resulting to coordinated and effective security

responses. On the other hand, a strong link between security agents and the civil society has led to

translation of security responses to civilian language understood by county government and the

civilians.

The long term attitudinal perceptions of Turkana community being loaded with firearms has

always antagonized the peace building efforts and confidence to live harmoniously. Therefore,

relationship between investors and communities need proper management to minimize escalating

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conflicts and fears. The role of administrative units such as Ward Administrators remain

paramount in making communities aware of issues regarding the oil business.

4.8.1.7 Role of the ministry on coordination and policy between the county and national

government

This question was directed to CEC – MEENR. She began by saying that resources allocated to the

ministry are planned and managed well in fulfilling the mandate allocated to the ministry by the

Turkana County Government in collaboration with the National Government. Also, the ministry

is committed in supporting investors to do the right thing through involvement of all stakeholders

in decision making including policies and bills on natural resources. The ministry has a proven

working record with wider stakeholders and networks e.g. Kenya Forest, KWS, KEFRI,

Meteorological department, NEMA, Oil companies, CSOs to mention just a few by involving them

involve them in everything being done.

The ministry in particular, worked with KWS in establishing conservancies in Southern Turkana.

Despite challenges witnessed, all concerned stakeholders worked tirelessly putting their heads

together to look at the effects of conservancies in nurturing livelihoods of pastoralists. The

common destiny realized in establishing conservancies further strengthened the relationships of

stakeholders on environmental management, utilization and coordination of issues.

4.8.1.8 The Role of Education in development

This question was directed to Prof. John Obiri to respond with consideration to DRR. The professor

began by appreciating the motive of Turkana professionals in undertaking Disaster management

related courses in considerable numbers.

He said, such capacity would help in improving Early Warning Systems, Disaster mitigation and

management, build structures and strategies for disaster prevention and policies for better survives

delivery. He added that best plans must have disaster preparedness in mind and that is how the

county can gain a lot from the already earmarked sectors of economy such as Tourism, Culture,

and Human Science Pack.

4.8.1.9 Other crossing comments from the panelists; including key points from CSOs plenary

presentations

Security although a national government function should be a concurrent function whereby the

county is also given the mandate to participate in security developments.

The County should take lead in impacting values to young generation to move towards

actualization. That is the only way talents, expertise and enthusiasm of Turkana populations can

be meaningful to their economy.

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The County government of Turkana should start developing a plan for demarcating Turkana land

for different economic activities. This will also see the owners acquiring tittle deeds and using

capital financing options to diversify businesses.

In terms of access to resources found in Turkana land, a win win situation is ideal for all whereby

there is no exploitation of resources for the benefit of a few individuals or firms. This is achieved

if the believe to have all benefit prevails.

Turkana County has both competitive and comparative advantages as avenues to build its economy

stronger. Having tourist attraction sites and bordering three (3) countries are comparative

advantages to fostering international trade. Therefore, the county should therefore invest in tourism

and open border routes for trade and other bilateral relationships.

The main road connecting Turkana county and Kitale needs to constructed for faster transport and

communication. Such infrastructural developments can create economic diversification making

people not put their heads on oil business along! Livestock, Crop and Fish farming are worth

exploitation in Turkana County.

In regard to the long history of CSOs in Turkana County, the willingness is in place to support

development. Therefore, CSOs should always be given a role to play towards development of

Turkana County. More women groups, youth groups and people living with disabilities need

priority consideration during civil society engagements in matters of county development.

County land management board need to have a clear engagement by executive through the county

assembly to effectively coordinate issues of land for development of Turkana.

Turkana County is regarded as a place where issues are being discussed and the levels of

consultation among stakeholders is high as compared to other areas where extractives have been

done. This spirit should be carried on!

In regard to education, two decades ago, Lodwar high school was the only boys’ high school while

Turkana Girls was the only girls’ high school in the county. Those not able to make to high school

were considered failures and went to polytechnic because they were thought to be failures. Today,

those technical skills are in high demand and more students should now be encouraged to take on

technical skills.

Despite a number of issues to deliberate upon, cost of organizing and conducting forums is

becoming too high. There is need to reduce the cost of conducting important forums in order to

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save budgets which can increase the number of such forums. These forums have become eye

openers making people see opportunities that did not see! Therefore, it is time to call people to

give them information and capacities they need for the good of the county.

A lot in terms of development has been done in urban areas while pastoralists in the interior are

like spectators. When are informed about oil found in their grazing fields, they become more

worried. In addition, pastoral areas have limited facilities e.g. water. Pastoralists need to get more

information regarding issues of their own development.

The county government had done reasonable work although a lot more has to be done. CIDP has

motivated sectoral developments in the county and a strategic plan to deal with challenges in a

futuristic manner need to be developed and operationalized.

The economic gains from county sectors of economy require technological infrastructure to

collect, bank, manage and account for resources. The world is moving digital and services systems

are now integrating technology for efficiency, effectiveness and timeliness.

Ministry of Education of Turkana county needs to map all schools in the county to show

enrollment, dropping rate, success rate and ultimate attainment of cherished goals, and

recommending best practices of building and perfecting skills for development through education,

training and exposure.

In order to improve citizen participation, community policing structures should be properly built

and further engagements should be enhanced at different levels of security structure. More efforts

should be put in peace building and reconstruction of conflict affected areas.

Graduates from UK to take up their roles in the oil & gas industry to contribute in stabilizing the

industry and also participate in other partnerships to come!

Turkana county needs a robust plan towards environmental conservation. Therefore, all

stakeholders including CSOs should be properly engaged in environmental governance. A plan to

effectively access and utilize the county resources should be agreed upon, audited and finally

executed for the benefit of all.

Tullow oil and other oil companies are regarded as guests in Kenya and Turkana County.

Therefore, community needs to perceive such companies positively and incases of

misunderstanding, communities should engage with government other than politicians.

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Advocate for community rights through sensitizing community members and stakeholders on

impediments affecting economic sectors in the county.

CSOs need to be appreciated for serving Turkana County even before devolution and county

government put in place. They need to be consulted, and their willingness remains intact especially

in sharing information mobilized from the community.

Mechanism to hold accountable those responsible for destruction of environment should be put in

place. The selected county priorities on environment should be done well in order to strengthen

utilization of environment and rehabilitation/reclamation of the affected parts of it.

Gender mainstreaming in extractive industry and equity in resource allocation and benefits sharing

should be considered at all levels of resource planning and management. This will limit the re-

occurrence of the already documented gender related challenges that affect the industry. Tullow

oil did best with example of ladies in Turkana South engaged during oil exploration and drilling

who proved to be good especially in community mobilization. Women can still be engaged in high

profile assignments including being put at the centre stage of decision making forums.

In order to hold Government and Extractive industries to account, the approach should be working

with all stakeholders towards a common focus. Those charged with overseeing roles should be

given room to do so.

There is need to partner will legislators because are the ones who can table issues in parliament.

Equally, County Governments need to work with CSOs by properly spending the resources they

are allocated other than returning to the sources they got them from.

In regard to the role of UN in strengthening engagements of partners, UNDP is at an advanced

stage of Civil Society Strengthening programme. Consultations with national government, county

governments and civil society are ongoing finally to see CSOs capacities to engage meaningfully

with county government adequately built.

CSOs be considered on county procurement tenders. This will bring income to CSOs making them

rely less on donor and gain capacities to sustain themselves within the county.

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5.0 ANNEXES

5.1 Main event speakers and moderators

H.E. Josephat Nanok.

Governor Turkana County

Hon. Andrew Kamau

(PS – MoEP)

Mrs. Rhoda A. Loyor

(CEC - MEENR)

Joseph Epuu (CCO –

MEENR)

Anthony Mwangi

(GPA& CD Tullow)

Prof. Peter Wekesa

(Kenyatta University)

Muthoni Koinange

(Managing Consultant

SPA)

Pauline Lokuruka

(Sec – County Lands

Management Board)

Erastus Ethekon

(Governance expert

UNDP)

Prof. John Obiri

(MMUST – University)

Alexander Lama

(Secretary the HUB)

Mark Ekuwam

(Chair – Turkana

Professionals

Association)

Mary M’Mukindia

(Founding member

(PIEA)

Jeroen De Zeeuw

(Development specialist,

Founder TIMU)

Robert Kemei (Master

of Ceremony)

David Ekiru

(Panel and discussions

Moderator)

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5.2 Key organizations that made presentations

Republic of Kenya

Ministry of Energy and Petroleum

TNRG - HUB

5.3 Event programme for day 1

0800Hrs Arrival and registration

0830Hrs Opening Prayers Diocese of Lodwar representative

0845Hrs Welcoming remarks by County Chief Officer – Mr. Joseph Epuu

0900Hrs Acknowledgement by the County Secretary – Mr. Peter Eripete

0915Hrs CEC (MEENR). Mrs. Rhoda Arupe Loyor

- Area MP

- County Commissioner

- H.E. Governor keynote address

- Chief guest PS

1030Hrs Update on progress of oil and gas activities in Kenya - Principle Secretary, Ministry of

Energy & Petroleum – Mr. Andrew Kamau

Operational update on the planned Early Oil process Mr. Anthony Mwangi

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1100Hrs Health break

1130Hrs Structure of engagement on oil & gas between national & County Government Mrs. Rhoda

Loyor CEC, Turkana County Ministry of Energy, Environment & Natural Resources

1220Hrs Recommended best practices on revenue management Prof. Peter Wekesa (Kenyatta

University)

1300Hrs Lunch break

1345Hrs Land rights and compensation in the oil & gas cycle Mrs. Pauline Lokuruka Secretary –

County Land Management Board

1430Hrs Expected social performance of oil companies – Muthoni Koinange

1515Hrs Plenary session

- Session (a) land rights & compensation key discussants (Mrs. Lokuruka, Mr. Mark

Ewesit, Susan Muchiri, Ministry of lands representative, Kenyaman Eriong’oa)

- Session (b) management of environmental , social and economic issues anticipated in

the oil life cycle (Richard Kering, Mr. Clement Nadio, Cepsa representative, Alex

Mutiso, Moses Etelej)

1600Hrs Converge and debrief from plenary sessions

1630Hrs Tea break

1700Hrs Close of day 1

5.4 Event programme for day 2

0800Hrs Arrival and registration

0830Hrs Opening Prayers - Pastor Boniface Lokuruka

0845Hrs Opportunities for local content in the Oil and Gas life cycle – Mr. Mary M’mukindia

founding member Petroleum Institute of East Africa (PIEA), former MD National Oil

Corporation

0930Hrs Report: Case study on Conflict arising from extractives in Turkana - Professor John Obiri

1000Hrs Management of Conflict in the extractives sector – Mr. Erastus Ethekon Governance

Expert

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1030Hrs Health break

1100Hrs Plenary session

- Session (a) opportunities for local content (Mr. Andrew Kamau, Ms. M’mukindia, Ms.

Susan Munyori, Ms. Rhoda Loyor, Mr. Mathew Logurale, Bonface Korobe)

- Session (b) management of conflict in the extractive sector (Mr. Erastus Ethekon, Mr.

Joseph Mele, Professor. Obiri, Cepsa, Capt. Augustine Lokwang, Sammy Ekal).

1230Hrs Coverage and debrief

1300Hrs Lunch

1345Hrs Role of Civil Society in the oil life cycle Mr. Alexander Lama Secretary the HUB –

Conglomerate of Civil Societies in Turkana County

1630Hrs Enhancing Transparency & Accountability in the oil & gas life cycle (Jeroen De Zeeuw –

Development Specialist, founder TIMU)

1730Hrs Plenary Presentations by Civil Society Organizations (CSOs)

1800Hrs Conclusion and Closure of the event