Kenya's oil hits black market

As the standoff between the National Government and Turkana County Government on how to share revenue from the sale of crude oil continues, Saturday Standard has unearthed a developing black market of crude in Turkana.

The shocking discovery is the latest twist of how a country can go wrong when it cannot handle new found mineral wealth. The black market has attracted Ugandans and Somalis who have increased their presence in Lokichar in recent years as the town wakes up from it slumber. While majority have been attracted by the town’s rising fortunes, Saturday Standard has established that a number of them are there for the illicit oil.

“There is a lot of oil here, I don’t think we can finish it. This is the guy who goes inside the Tullow’s sites,” one smuggler tells us while pointing to a man who has just arrived with a fresh load of crude in a sack on top of a motorcycle.

Dozens of residents are accessing barrels of crude from the oil wells with the help of corrupt employees working for the companies prospecting in the South Lokichar basin.

In one of the compounds we visited, we found an old Mitsubishi Canter lorry filed with piles of solid crude oil chunks melting naturally into waiting buckets courtesy of a build-up of heat from the scorching sun. The owner, a man of Somali descent, came to Turkana three years ago through Uganda in search of riches promised by the discovery of oil.

He gives details of the crude refining process.

The stolen crude is heated in a drum over an open fire. The aim is to boil off the gasoline, which condenses in a water-cooled pipe and runs off into barrels stored dangerously close to the naked flames. “This is the first stage. From here we load it into a boiler,” he said.

Because of its waxy nature, crude oil from the Lokichar basin solidifies immediately it is exposed to the environment. This is the reason the government was in a dilemma on whether to construct a heated pipeline to Mombasa from Turkana or use specialised tanktainers to transport it.

It is also why it is easy to traffic. Once it solidifies, the smugglers cut it up into huge chunks and load it into sacks. These sacks are then loaded onto boda bodas and ferried out of the sites into store houses spread across the town.

“I have already sent for a 47kilovolt generator to help in the refining since what we have is not achieving results. Soon we will be producing diesel and petrol,” one of the illegal refiners who only identified himself as Yassin.

Shocking news

“Yes it is expensive but life is a learning process,” said another illegal refiner, who would not discuss profitability of this unlawful venture.

The different gasoline products vaporise according to their boiling points starting with paraffin and ending with diesel. But from what we observed the interest of those operating the illegal refineries is diesel. Energy experts say it is extremely difficult and hazardous to try and refine crude.

“Crude oil can only be refined in a petroleum refinery which has equipment that can do the requisite processes in order to get petroleum products. Remember oil is extremely inflammable,” Wanjiku Manyara, the executive director of Petroleum Institute of East Africa (PIEA), told Saturday Standard.

“A refinery has to be licenced by government. What you are telling me if true is extremely shocking,” she said.

Police have also denied knowledge of smuggling rings

“I am not aware of people accessing the oil. I have been in Nairobi for some time on official duties,” Ronald Opili, the police commander Turkana County told Saturday Standard.

“You should talk to the OCPD Lokichar because he is the one in charge of that operation. If you know where this refineries are, tell us and we will carry out a raid because this is criminal,” Ronald Opili, the police commander Turkana commander told us yesterday.

However the police promised to crackdown on the illegal oil refineries.

All of Tullow’s sites are monitored by strategically placed CCTV cameras placed along their walls, at the gate and inside the premises. Each site has two guards at the gate and a supervisor, all working for a security firm. Insiders whom we cannot name, say all guards and cameras are linked to a command centre in Lokichar town. The supervisors meet every evening at the command centre for a briefing. However, interestingly one of the guards at Erut 1 said they have never seen crude oil.

“Our job is to man the gate and the perimeter walls. What goes on inside we don’t know because we don’t go beyond where we are supposed to stay at all times,” said the guard.

So difficult is it to gain access to Tullow Oil’s sites despite trying to do so through their command centre in Lokichar town and top officials in the Ministry of Energy.

“You know Tullow is a listed company, you can’t just ambush them and say you want to get access to their sites because whatever comes out will have an implication on its reputation,” Energy Principal Secretary Andrew Kamau told us when we were denied entry on arrival in Lokichar.

Prohibited access

 “I am sorry. I have really tried and they have declined,” he said when we pressed on.

The standard response from every official we spoke to was we need to get clearance from Nairobi, get adequately trained then get airlifted by the company to Lokichar. This raises the question on how locals are able to not only get access into the sites but also steal crude.

Illegal crude oil refining has been well documented in Nigeria where oil companies and the government complain they are losing more than $1 billion (Sh100 billion) a month in proceeds from stolen oil in the Niger Delta.

The area has one of the largest undetermined quantities of crude in Africa’s biggest economy and is Nigeria’s main oil producing region. It also has the largest concentration of illegal oil refineries run by militia that are able to operate courtesy of the high levels of corruption.

However, just like the present situation in Turkana, the Nigerian government’s commitment to empowering residents of the Niger Delta has been questioned and it remains one of the poorest regions in the West African nation.

As a result, the locals have taken matters in their own hands through stealing and refining crude on their own.

“Local Nigerians, however, have long complained that the profits never reach them. Most live in abject poverty and have turned to stealing oil from corporate pipes to refine themselves and sell on the black market,” American broadcaster Public Radio International reported recently.

“The oil companies, the government and the communities below are locked in a battle of blame over who is responsible for the cycle of violence. Meanwhile, the region is being plundered. There is little development and the majority of people live on less than $2 a day, despite the region’s vast oil wealth,” said CNN.

Tullow Country Manager Martin Mbogo insists it is impossible for even a drop of oil to leave any of their sites. “I am not aware personally that we have crude oil sitting somewhere in homesteads in Lokichar or wherever. I can confirm to you that not a litre gets out of our doors before we know it,” he said.

Robust system

“We have a robust system. The outlets to the wells are plugged so you need a guy to unplug them. We get inventory counts every day, we run reconciliations every month. We have guards sitting on site and we have technology to help us manage that,” he said.

Mbogo however said he would be happy to do an investigation to find out if indeed there is any leak.

“I struggle to see how this could be from any of our locations. I am not aware of anyone who is drilling for oil in the Lokichar basin,” he said.

vachuka@standardmedia.co.ke / mmichira@standardmedia.co.ke