News
Epra will acquire formal powers to regulate crude oil trade
Tuesday November 21, 2023
The government plans to grant the Energy and Petroleum Regulatory Authority (Epra) formal powers to regulate crude oil under proposed amendments to the law.
The Statutory (Miscellaneous Amendments) Bill, 2023 proposes to amend the Energy Act, 2019, giving Epra legal backing to be the regulator of Kenya’s upstream petroleum sector.
This comes at a time when the country is looking to keep its hopes of becoming an oil producer alive.
Crude oil regulation
“Delete the words ‘except crude oil’ appearing in paragraph (a)(ii),” the bill states.
Currently, the law mandates Epra to regulate the import, refining, export, transportation, storage and sale of petroleum and petroleum products except crude oil.
It also regulates the production, import, export, transportation, distribution, supply and use of electrical energy, with the exception of authorizations granted to nuclear installations.
“We already regulate crude oil. This is simply to regularize an error that occurred during the amendments to the oil and energy bills during the debate in 2019 before they were adopted,” the director general of the ‘Epra, Daniel Kiptoo, at Business Daily.
Epra’s exclusion from crude oil regulations stems from the Petroleum (Exploration, Production and Development) Bill, 2017.
Oil exploration license
The bill proposed the creation of the Upstream Petroleum Regulatory Authority (Upra), which would be responsible for regulating crude oil.
Epra, on the other hand, had been left, thanks to the energy law, to supervise the downstream oil and electricity sector.
However, lawmakers later removed Upra in the final oil law, but failed to assign the upstream role to Epra, which is the successor to the Energy Regulatory Commission.
This means that although Epra has regulated the crude oil sector since its inception, the legal basis for this oversight was lacking, a situation that the latest amendment seeks to rectify.
The energy regulator has played a pivotal role in granting oil exploration licenses to companies seeking to check the availability of crude oil and gas in various offshore and onshore oil blocks across the country.
Epra is currently reviewing a revised Field Development Plan (FDP) submitted by British oil company Tullow Oil for the commercial development of hydrocarbon resources in its Blocks 10BA, 10BB and 13T located in the South Lokichar Basin.
Tullow holds a 100 percent stake in the three oil blocks after its joint venture partners Total Energies and Africa Oil Corporation, which each held 25 percent stake in the blocks, sold their stakes to the company.
Even as review of the FDP continues, Tullow has struggled to find well-capitalized investors to partner on the project following the exit of its joint venture partners.