In the past four years Kenya has drilled over 45 oil and gas exploration wells — more than the total number of wells drilled since the 1940s.

At the same time, Kenya has also undertaken extensive policy, legal and institutional reforms in line with the 2010 Constitution, which has resulted in the approval of several Bills by parliament such as the Petroleum Bill 2015; the Community Land Bill 2015; and the Energy Bill 2015.

These important Bills not only align the oil and gas sector with the provisions of the Constitution, but also set out the industry’s regulatory structure and ensure that the industry is managed in a transparent and equitable manner, with all production sharing agreements ratified by Parliament.

The Bills additionally ensure protection of the environment, local community participation; and provide a framework for managing the fiscal opportunities and risks of oil revenues expected once commercial production begins.

The industry provides an important building block for the continued growth of the country. Indeed, oil and gas are key sectors that support the Vision 2030 National Development Plan.

To ensure continued progress in Kenya’s oil and gas industry, the government — in collaboration with the Turkana County government and the Kenya Joint venture partners (KJV — Tullow Oil, Africa Oil and Maersk Oil) — is now working on the Early Oil Pilot Scheme.

Early Oil Pilot Scheme will utilise five existing wells to produce oil, with phase one targeting oil production of 2,000 barrels per day. The oil will be transported from Turkana to Mombasa by road in insulated tanktainers. At current oil prices, Early Oil Pilot Scheme is not expected to generate significant revenue.

Early Oil Pilot Scheme is an enabler and not a replacement for the Full Field Development (FFD), which will include the Lamu Port-South Sudan-Ethiopian Transport (Lapsset) corridor projects, a crude oil pipeline from Turkana to Lamu carrying between 80,000-150,000 barrels of oil per day.

Although it will be a small scale project, Early Oil Pilot Scheme will mark the first major milestone in Kenya’s oil and gas industry, which is that of producing and exporting crude oil for the first time in the country’s history.

So why are we undertaking this pilot scheme?

First, Early Oil Pilot Scheme will be key in establishing logistical and technical infrastructure (e.g. roads, bridges) and other key arrangements crucial for supporting FFD.

Establishing these aspects beforehand will allow the operators to identify and manage risks associated with large capital-intensive projects like FFD and so reduce potential delays. The Early Oil Pilot Scheme will also provide an opportunity for both the National and County governments to gain experience and capabilities necessary to facilitate FFD.

Second, Early Oil Pilot Scheme will provide important technical well data that will assist in planning for FFD. This data will help the operators of the project understand the behaviour of oil reservoirs and how they transform as they produce oil. This is also known as the appraisal phase.

During the last appraisal phase, over 60,000 barrels of crude was produced and is currently stored at Lokichar. With the drilling of five new wells, it is necessary to produce more crude oil in order to understand the reservoirs better and increase Kenya’s recoverable reserves from the current 750 million barrels to over one billion barrels.

This crude oil will also have to be stored somewhere. The only two alternatives are to build more tanks at Lokichar or use the existing tanks at Kenya Petroleum Refineries in Mombasa. We have chosen to use the already existing asset and provide revenue to the refinery.

Third, Early Oil Pilot Scheme will help establish Kenya as a crude oil exporter. Since our oil will be a new product in the global crude oil market, Early Oil Pilot Scheme will help introduce it and show what potential buyers are prepared to pay for the oil product.

Finally, Early Oil Pilot Scheme will create employment and business opportunities for Kenyans and local businesses. The opportunities will be limited initially, but they can be scaled up when the FFD begins.

For these reasons, the Early Oil Pilot Scheme is an important technical project which will be a key enabler for FFD, which still remains some years away.

It should be clear that Early Oil Pilot Scheme will not immediately solve the challenges faced by the communities in Turkana. However, it will act as a stimulus for tackling some of these challenges and unlock immediate benefits.

Andrew Kamau is the Permanent Secretary in the Department of Petroleum; Ministry of Energy & Petroleum.