Impact of Reduced Global Crude Oil Prices

Kenya has been on the map since the discovery of oil in Turkana by Tullow Oil Plc of the United Kingdom together with its partner Africa Oil Corporation of Canada who were the first ones to discover oil on block 10BB in 2012.

Since the discovery, a lot has been done in Turkana came as a blessing the county as it was definitely going to trigger a lot of socio-economic development in the county that has been left behind for a very long period of time.

The county attracted so many investors who ranged from small to medium businesses, triggered the development of infrastructure e.g. roads and opened up employment opportunities to people from the local community, both skilled and unskilled.

This was seen as a very great move in the County of Turkana. Despite all the expectations, crude oil prices globally started to decline in mid-2014. This came unexpectedly but there were hopes for the prices to be adjusted as time went by, something that has not happened up to now. In fact, the prices continue going down the more and the trend is abit worrying.

This has led to a slow down on oil exploration in the country. The Kenya Oil and Gas Association disclosed that the matter will lead the industry to be affected to a certain level but activities will still be carried out as usual. This is because the East African Region has emerged as an oil and gas hub, following the discovery of oil and natural gas deposits in Uganda, Kenya and Tanzania.

Government records showed that Kenya oil deposits were above the minimum threshold for commercial exploitation that the industry estimated to be at 600 million barrels, which comprised of deposits discovered in the Lokichar basin in Turkana.

Falling crude oil prices will in particular make it difficult for companies seeking to raise money to finance exploration activities in the oil industry. Some of the interested companies have considered this to be a possible threat since they have been optimistic of continuing with exploration activities.

The global crude oil prices have been going down and they are currently at $32 per barrel, thus slowing down the process of oil production in leasing oil production areas and international oil and gas companies concentrate more on areas that production is ongoing. Oil production could be delayed due to a slowdown in exploration processes.

Article by Vera Shawiza.