Former Minister Takes Over At State Oil Corporation

Kenya needs to produce its own oil in order to cushion itself from external shocks, National Oil chairman and former Energy Minister Kiraitu Murungi stated.

Mr Murungi said external pressures such as the dollar volatility and conflicts will always affect energy security, saying internal sources were a sure bet in stabilizing the supply.

“You need to produce your own oil because it is what you can control,” Mr Murungi said at the NOC headquarters in Nairobi when he took over from Engineer Patrick Obath.

Industry experts hope that the appointment of Mr Murungi will give the corporation new energy in its turnaround plans.

NOC was incorporated in April 1981 under the Companies Act, Cap 486 of the Laws of Kenya with a mandate to participate in all aspects of the petroleum industry.

It was founded with a mandate to spearhead petroleum exploration activities in the country, guaranteeing security for the supply of petroleum products and stabilizing prices of petroleum products.

“NOC was established for the purpose of energy security. NOC still has that relevance. We also have a rich mandate in the upstream sector – exploration and production. You need to produce your own oil because it is what you can control,” Mr Murungi noted.

Mr Murungi spoke even as Kenya inches closer to becoming an oil exporter. The Energy and Petroleum Regulatory Authority (Epra) has said it is set to complete its review of the new plan to commercialise the oil in the South Lokichar Basin in June.

Mr Murungi also praised the ongoing Government-to-Government oil import agreement, saying it helps to stabilize supply and pricing.

“I want to thank the President for appointing me even though I was not in Kenya Kwanza during the elections. It shows he has some trust for me in this sector.”

The former governor exuded confidence that NOC would rise from its financial challenges saying when the Narc government took over in 2003 its situation was even worse.

“When we came in, NOC had only six stations. By the time we were leaving 10 years later they were 70,” the chairman noted.

During his tenure as Minister for Energy, Mr Murungi issued several notices and circulars that aided the Corporation in meeting its mandate.

Legal Notice no 43 of 2008 issued regulations guiding the establishment of the strategic petroleum reserves that required the NOC to establish and manage strategic petroleum reserves equivalent to 90 days of consumption for the country.

Legal Notice No. 96 of June 2010 also set aside a 30 per cent petroleum imports allocation quota for the corporation.

The Head of Public Service Circular in 2015 also directed all Government Departments and SAGAs to procure their Petroleum product requirements/demands from the National Oil Corporation of Kenya Ltd.

Financial challenges have, however, not allowed NOC to execute its full mandate.

NOC CEO Leparan Ole Morintat said it was befitting that Mr Murungi was now in a position to implement what he had formulated as policy when he was a minister.

“It was during Mr Murungi’s tenure that oil was discovered in Turkana and the ministry attributed the State’s 22.5 per cent share in carried interest in the production sharing contract to National Oil.”

The Lokichar field asset is quantified at 472 million barrels recoverable.