The State Department of Petroleum was created in November 2015 following government reorganization which saw the elevation of the Ministry’s Petroleum Directorate. The State Department is under the Principal Secretary for Petroleum.
The Petroleum Directorate is headed by Commissioner for Petroleum, who reports to the Principal Secretary for Petroleum. The current Head is Mr. Martin Heya.
The Directorate was carved off from the larger Geo-exploration department in April 2010 and given the mandate of spearheading all petroleum operation programmes in the country including policy formulation, review of fiscal, legal and regulatory framework, monitoring and supervision of oil and gas exploration, development and production activities.
To explore, develop and produce the petroleum reserves existing in the country’s sedimentary basins for sustainable national economic development and wealth creation.
To enhance self-sufficiency and security supply of petroleum products for reduction of total Import Bill and to increase foreign currency reserves thereof spurring industrial development and equitable improvement of the standards of living of Kenyan citizens.
Develop conducive petroleum policies, legal and regulatory framework to attract increased investments in the country’s petroleum sector.
Continuously build national capacity in petroleum sector to progressively increase local content capabilities in the petroleum sector for prudent management of the country’s petroleum resources for long term optimal benefits and value addition to the country.
The petroleum sector is organized into three sections: the upstream, mid-stream and downstream.
The upstream section involves the process of exploration, development and production of crude oil and natural gas.
The mid-stream section revolves around storage, refining and transportation of crude oil into consumable petroleum products.
In the downstream section, refined products are made available to the consumers through supply and distribution, for example at petrol stations.
Kenya has four (4) petroleum exploration basin and these are: Lamu Basin, Anza Basin, Mandera Basin and Tertiary Rift Basin. Oil and gas exploration in the country began in 1956 and the breakthrough came in March 2012 with the discovery well –Ngamia 1 Well, in Lokichar Basin in Turkana County. As at December 2015 seventy four (74) wells had been drilled with twelve (12) hydrocarbon discoveries to date, nine (9) of which are in Turkana County. The other three are in Anza Basin and Offshore Lamu.
Licensing of petroleum exploration blocks
As at December 2015, there were forty six (46) petroleum exploration blocks in Kenya of which 44 have been licensed and are operated by twenty three (23) International Oil Exploration CompaniesThe exploration blocks are expected to increase to fifty five (55) once nine (9) blocks under relinquishment obligations from several blocks are gazette. Licensing of exploration Blocks, is governed by the Petroleum (Exploration and Production) Act Chapter 308 of the Laws of Kenya.
All contracts are based on a Model Production Sharing Contract (PSC) issued as a schedule to the Regulations issued under Section 6 of the Act. The Act is currently under review. The proposed “Petroleum (Exploration, Development and Production) Bill 2015” and Model production sharing Contract 2015 provide a framework for the contracting, exploration, development and production of petroleum resources for prudent revenue management of the resources taking into consideration environmental concerns and local content.
Petroleum is one of the prime movers of the country’s social and economic development. Petroleum products are predominantly used in transport, commercial and industrial sectors. The Kenya imports all its petroleum products requirements. The Ministry coordinates this activity with oil marketing companies through a process known as an Open Tender System.
The Kenya Pipeline Company provides product movement infrastructure including storage and oil pipeline services.
Distribution and Marketing of petroleum products is done by oil marketing companies. The National Oil Corporation of Kenya (NOCK) is the state body that is engaged in this area. It is also involved in the upstream activities.