The energy sector in Kenya is facing a skills crisis, which could hamper oil exploration and production activities as the country prepares to kick start exportation of crude oil next year.
Addressing an oil and gas gathering, Andrew Kamau, the Principal Secretary in the ministry of Energy and Petroleum, said, for instance, that Kenya Pipeline Company (KPC) only has two welders that can work on a live pipeline.
What is more, the two gentlemen are nearing their retirement and the danger is there is no one to take over their jobs. This would essentially mean that the Company would have to import labour to take care of the critical pipeline infrastructure, whose breakdown can easily bring the country to a standstill.
“Recently we undertook a skills audit…. and it was quite interesting, it told us a lot. For instance there are no (certified) welders in Kenya. There are two welders at KPC who can weld live pipeline. They are both 58 years old and will be retiring shortly,” Kamau told participants of the fourth East African Oil and Gas Summit.
While KPC is trying to correct this, albeit belatedly, the rest of the industry especially in the midstream – where KPC plays – and upstream (exploration and production) segments of the industry are grappling with major capacity gaps.
And the lack of this – and other skills for the energy industry – is becoming a major concern for the country, that is hopeful of more activity in the energy industry, in particular the upstream segment, with the recent oil finds and planned start of oil production next year.
The Country is currently grappling with trying to maximise on returns from the oil finds and even has clauses in some of the planned laws for the industry that will require oil exploration and production companies to reserve a proportion of the jobs and contracts for Kenyans.
“It is one thing for Government to tell you that you must have 40 per cent local content, it is another thing for us to provide you with an enabling environment and a roadmap to develop that local content,” said Kamau.
An October 2016 report raises similar concerns. In addition to the human resource capacity gaps, it notes in the absence of a law overseeing how oil companies engage local contractors, the country will end up with the short end of the stick as far as exploitation of oil resources is concern.
The report was commissioned by the Kenya Petroleum Technical Assistance Project (KEPTAP), a World Bank initiative aimed at helping the country manage the petroleum sector. It recommends radical reforms to the industry.
“These recent oil and gas discoveries… have triggered new developments which require a re-design of the institutional set up to effectively govern the petroleum sector with clearly defined roles and responsibilities,” said the report.
“Local content on oil and gas legislation should stand on its own as a separate Act of Parliament to avoid unnecessary conflict with the Kenya Constitution, other relevant and existing local content policies and proposed legislation within the Ministry of Energy and Petroleum and other Government agencies,” said the report.
It notes that at the moment, the upstream sector is dominated by foreign labour and a well thought out local content strategy should reverse the dependence of the sector on international technical skills and supply of goods and services for the sector.
It further notes that it is not only the inadequate human resource capacity that might see Kenya missing out on the petro dollars.
Other areas that might result in Kenya getting meagre returns from oil finds that have potential to transform the economy include weak laws and lack of capacity among regulators.
“Further, the development of petroleum sector reforms is necessary to help manage environmental, social, health and safety challenges in the management of the petroleum sector with discovery of commercially viable oil and gas deposits.”
It further notes that the country has to date not put in place laws and policies of its own but largely governs the sector on ‘borrowed’ policies.
“These are policies that are based on voluntary assent to international protocols or code of practice and standards by oil companies operating in Kenya,” said the KEPTAP report.
Other than the ministry of Energy that is seen as ill prepared to govern the fledgling industry, the National Environment Management Authority is also seen as having inadequate capacity to regulate environmental practices related to the industry.
Nema is seen as lacking the knowhow to evaluate Environmental Impact Assessments that are done at the early stages of any project to handling more complex issues like the eventuality of an oil spill.
“Nema lacks capacity on petroleum sector. The major reason for this is lack of technical understanding on areas to focus on in the upstream sector operations where there is potential for sources of environmental and social impacts. To bridge this gap, it is recommended to have a petroleum sector dedicated unit,” said the report.