Epra to get formal powers to regulate crude oil business

The government plans to grant the Energy and Petroleum Regulatory Authority (Epra) formal powers to regulate crude oil in proposed amendments to the law.

The Statute Law (Miscellaneous Amendments) Bill, 2023 has proposed to amend the Energy Act of 2019, by giving Epra legal backing to be the regulator of Kenya’s upstream oil sector.

This comes at a time when the country is aiming to keep its dimming hopes of becoming an oil producer alive.

Crude oil regulation

“Delete the words “except crude oil” appearing in paragraph (a) (ii),” says the Bill.

Currently, the Act gives Epra the mandate to regulate the importation, refining, exportation, transportation, storage, and sale of petroleum and petroleum products except crude oil.

It also regulates the generation, importation, exportation, transmission, distribution, supply, and use of electrical energy except licensing of nuclear facilities.

“We already regulate crude oil. This is just regularising an error that occurred when there were amendments to the Petroleum and Energy Bills during the debate in 2019 before they were passed into law,” Epra Director-General Daniel Kiptoo told Business Daily yesterday.

Epra’s exclusion from crude oil regulation came from the Petroleum (Exploration, Production and Development) Bill, 2017.

Oil exploration licenses

The Bill proposed the establishment of the Upstream Petroleum Regulatory Authority (Upra) which would be tasked with regulating crude oil.

The Epra, on the other hand, had, through the Energy Bill, been left to oversight the downstream oil sector and electricity.

However, lawmakers would later remove the Upra in the final Petroleum Act, but failed to add the upstream role to Epra, which is the successor to the Energy Regulatory Commission.

This means that although Epra has been regulating the crude oil sector since its establishment, the legal backing for that oversight was lacking, a situation that the latest amendment seeks to rectify.

The energy regulator has been playing a pivotal role in handing 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 firm Tullow Oil for the commercial development of the hydrocarbon resources in its blocks 10BA, 10BB, and 13T located in the South Lokichar Basin.

Tullow owns a 100 percent stake in the three oil blocks after its joint-venture partners Total Energies and Africa Oil Corporation, who had 25 percent stakes each in the blocks, offloaded their stakes to the firm.

Even as the review of the FDP continues, Tullow has struggled to find well-capitalized investors to partner in the project following the exit of its JV partners.