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{
    "id": 1242328,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1242328/?format=api",
    "text_counter": 55,
    "type": "speech",
    "speaker_name": "Hon. Chirchir",
    "speaker_title": "The Cabinet Secretary for Energy and Petroleum",
    "speaker": {
        "id": 13110,
        "legal_name": "Zipporah Jepchirchir Kittony",
        "slug": "zipporah-jepchirchir-kittony"
    },
    "content": "to the Kenya Petroleum Refineries where we had some tank firms. That is where the storage was done in Mombasa over a two-year period. The objectives of the early oil pilot scheme were as follows- (1) It was meant to provide important technical well data as well as other data to optimize the field development plan and the design of the crude oil export pipeline. The report is currently on my desk. (2) Testing the marketability of the crude oil from the South Lokichar Basin. (3) Establishing a logistical infrastructure. Basically it was testing and confirming that those bridges needed to be upgraded and other key arrangements to transport the crude oil from the production fields to the export load Port of Mombasa. (4) Enabling the national and county governments to gain the necessary experience and capabilities as Kenya transitions from exploration and appraisal into development and production. (5) Creating scalable employment and business opportunities that would assist in building capacity in the country. The buyers of the crude oil were competitively identified through a bidding process where interested parties bided on freight and premium for transportation of the crude oil to the international markets. You may be aware that oil is an internationally traded commodity. Therefore, there is splat pricing for the crude. The competition was basically for the margins in premium and freight. The crude oil was transported in two parcels as tabulated in the report which I submitted to the House. I hope all Members have managed to get a copy this morning. The first cargo of 26th August, 2019, had 240,150 barrels and the buyer was ChemChina UK Ltd. The second batch was on 30th September, 2022, and it had 174,627 barrels to Glencore Singapore Pte Ltd. In respect to the question raised by Sen. Lomenen, we are aware that Section 58 of the Petroleum Act, 2019, provides for apportionment of the profits from the sale of crude oil between the national Government, county government and the local community. If you go specifically to that section of the Act, it is 75 per cent for national Government, 20 per cent for the county government and 5 per cent for the local community. The crude oil sold from the South Lokichar Basin had been produced from exploration and appraisal activities. It was not commercial production. The table there shows the total number of barrels exported, revenue generated, the costs incurred and a deficit from early oil production scheme project. I think there were many experiments, which led to incurring a lot of costs. For those of us who have seen the production sharing contract, like I said, there is coast oil, which basically covers the coastal area and the profit oil is shared in a certain ratio between the company producing, which is Tullow Oil, and the Government. What goes to the Government is shared in the ratios that I mentioned. The cost is commonly referred to as cost oil, while the detail between revenue and cost is referred to as profit oil. It is the profit oil which is shared between the IOC and the"
}