Kenyan election dispute leaves oil sector in limbo

Kenya's closely fought presidential election will offer continuity for international oil firms operating in the country, provided that deputy president William Ruto's victory can withstand a looming legal challenge from longtime opposition leader Raila Odinga.

Ruto — who was closely involved in negotiations over the development of Kenya's 120,000 b/d South Lokichar oil project in Turkana — was declared winner by the country's top electoral body on 15 August with 50.5pc of the votes cast, narrowly beating his main rival Odinga with 48.9pc. But in a continuation of Kenya's long history of disputed elections, Odinga has rejected the result, saying the figures announced yesterday are "null and void and must be quashed by a court of law".

He said his team "will be pursuing all constitutional and legal options available to us".

Odinga's challenge leaves the country's nascent oil sector in limbo at a crucial time. London-listed Tullow Oil, Canada's Africa Oil and TotalEnergies are working towards a final investment decision on a project to develop oil fields in the South Lokichar basin and link them by pipeline to the Indian Ocean port of Lamu. Although he was the underdog going into the election, having fallen out with outgoing President Uhuru Kenyatta, Ruto's position as Kenyatta's deputy meant he played a central role in talks with the oil companies.

Tullow has made it clear that securing new strategic partners is critical for the project to move forward as it wants its stake to be more in line with a company of its size. The company has already held talks to sell part of its 50pc interest to Indian state-run firms ONGC Videsh and IOC, and Ruto's win should guarantee that these negotiations continue as planned.

Ruto has gained a reputation for agile decision-making and sources said he was instrumental in facilitating an early production pilot scheme in 2018-20, which involved trucking oil from South Lokichar by road to Mombasa for onward export to China. The start of crude exports in earnest will be crucial for Kenya to reduce its foreign debt burden and rehabilitate its ailing economy.

By Mercy Matsiko