Tullow Oil’s move on land Bill opposed

Firm argues for protection under the doctrine of sanctity of contracts and non-retrospective application of laws but experts warn that local communities will get a raw deal if the oil and exploration firm has its way, writes HAROLD AYODO

Tullow Oil’s proposal that some key clauses in the yet-to-be passed Community Land Bill be reviewed is facing opposition, with experts warning that local communities will get a raw deal if the oil and exploration firm manages to have its way.

Tullow Oil recently said that the Bill, formulated by a taskforce under the Ministry of Land, Housing and Urban Development to protect community land, requires further analysis and consultation to take into consideration how it might affect the oil and gas industry.

It said the draft Bill contains clauses, which could have significant implications for oil, gas, petroleum exploration and production companies. Tullow argued that exploration firms in production sharing contracts with the Ministry of Energy on behalf of the Government are keen on provisions of the Community Land Bill.

“Provisions of such a Bill should not conflict or should not be inconsistent with the existing/contemplated laws and policies that regulate or govern the sector…” said Tullow, adding that the provisions should not compromise efforts of investors in oil and gas exploration and production to monetise their investments.

“Provisions of such a Bill should not compromise benefits already agreed to accrue to an investor pursuant to the Production Sharing Contracts in place,” it said.

The firm said its arguments were hinged on the protection accorded under the doctrine of sanctity of contracts and non-retrospective application of laws.

“Tullow engaged in petroleum and gas exploration and production and signed production sharing contracts (PSCs) when Kenya’s upstream petroleum industry was not as vibrant,” it said, further arguing that there was no specific legislation with respect to the exercise of petroleum operations on community land. “Original contractors risked investing their capital in Kenya (as opposed to other jurisdictions) on the basis of legislation and terms offered by the government as at the time,” Tullow argued.

It proposed considerations to ensure any provision of the Bill that seeks to impose an additional burden on a PSC.

A holder should not have retrospective effect so as to negatively affect the benefits accruing to a contractor under such a contract. According to Tullow, the Community Land Bill should recognise precedence of the Petroleum (Exploration and Production) Act (1986), Land Act (2012) and the Constitution.

“Recognition should — especially — be where access to land for prospecting and compulsory acquisition is concerned, ownership of petroleum resources and benefit sharing,” Tullow said. renegotiate contracts

Recommendation

Consequently, Tullow recommended that it should be in consistent with the Constitution, Land Act and Petroleum (Exploration and Production) Act: “Fossil fuels are vested in the national government and held in trust for all the people of Kenya and not just the ‘host community’.”

Therefore, it argued that the role of the communities with respect to community land should be seen as landlords, licensors or gatekeepers but not sole owners or custodians.

But pundits say local communities will have a raw deal. The Economic and Social Rights Centre Executive Director Odindo Opiata says it will be a disaster for local communities if Tullow is allowed to have its way. “Communities like the Turkana and Lamu where oil explorations are being carried out open the door for committing serious harm to human rights, labour standards, environmental protection, and other social concerns,” Opiata says.

He adds that studies show that there are three main reasons why community participation should be mandatory in such projects.

“Community participation from the onset will enable identification of environmental and social risks,” Opiata says.

He argues that participation of locals is needed throughout all phases of the project cycle so that they can make decisions regarding their own lives. “Informed community participation enhances accountability through spill¬over effects at both the community and country level in line with the constitution,” Opiata says.

He says that Tullow’s argument about protecting the sanctity of contracts and non-retrospective application of the law is a recipe for impoverisation of local communities.

According to Dr Ekuru Aukot, discoveries of oil in Turkana County have impacted negatively on lives of several families in the area. There are also allegations of illegal and irregular sale of community and trust lands in the county that sits on an oil sea.

Lives of several residents have been affected as some grazing fields have been fenced off as multi-national firms explore oil as armed police officers keep vigil.

According to Dr Aukot, some of the mining agreements and contracts allegedly made between the government and exploration firms should be re-negotiated.

“Contracts can be invalidated or re-negotiated and an addendum included towards safeguarding constitutional land rights of the locals,” Dr Aukot says.

The Kenya Land Alliance (KLA) National Coordinator Odenda Lumumba weighs in that the extractive industry does not want to engage communities over sharing of profits. He says that most mineral resources countrywide sit on community land, which pits them in a collision course with mining and exploration firms.

“Communities are demanding between 30 and 40 per cent profits derived from mining but the extractive industry wants to remit a paltry between two and five per cent,” Lumumba says.

Lumumba says the extractive industry must share benefits with members of the community in line with the Constitution.