Kenyans to buy Sh103bn worth stake at Turkana two oil blocks

Kenya is set to witness the first croup of local oil barons within the next five years.

Kenyans will have a chance to have a stake at Turkana oil through an initial public offering (IPO) worth Sh103bn ($1billion) before the country start exporting the precious commodity.

Taxpayer’s will be able to buy back up to a 35 per cent stake in the two Turkana oil blocks with the bulk of the country’s reserves using the proceeds of a planned initial public offering of State-owned National Oil Corporation (NOCK) shares on the Nairobi and London stock exchanges.

“When you sign a contract you have a right to buy back some share, before production. The percentage we can buy back is 15 in one block and 20 in the other. The listing should raise enough money for the purchase,” Petroleum principal secretary Andrew Kamau said without indicating whether the State would exercise its rights for the entire stake under the clause.

The principal secretary told a local business daily that the contract for the concession of oil blocks to existing operators has a clause allowing the government to exercise a back-in right, which essentially means buying back a percentage of the ownership before production kicks in.

The government is planning to raise up to $1 billion (Sh103 billion) from the dual listing expected in early 2019, with NOCK having advertised for a consultant to guide the deal.

Each of the two blocks in the Lokichar Basin -- 4,719 square kilometre 13T and 6,172 square kilometre 10BB -- are jointly owned by British oil firm Tullow (50 per cent), Africa Oil (25 per cent) and Total (25 per cent).

In May, the Ministry of Energy and Petroleum and the London Stock Exchange (LSE) signed a memorandum of understanding (MoU) that set the stage for cross-listing of energy firms on the UK bourse and the Nairobi Securities Exchange (NSE)

The agreement also allows local energy firms to raise funds through bond issues on the UK bourse.

“We are now listing something that is real. The existing operators of the oil blocks are already involved... it is something that is in the contract,” the PS said

The acquisition of stakes in the oil blocks in 2019 would see the State have a foothold and a bigger say in the management of the resources ahead of the full-scale oil production expected in 2021.