Stalked by mandarins, hung out to dry by the courts

Kenya eventually made its inaugural crude oil exportation in August, with excitement, flare and pomp. The President of the Republic, top government mandarins and a number of County heads trooped down the coastal city of Mombasa to flag off the 200,000 barrels of the fossil fuel that official figures show will fetch Sh1.2b from a Chinese company, Chemchina, for export to Malaysia.

An exuberant, and understandably so, President Kenyatta, speaking at the flag-off, said Kenya has now joined the league of oil exporting nations. 

Beneath the excitement, however, lies deep-seated treachery in relation to the discovery, exploration and exploitation rights with unfulfilled quests for justice among the parties involved playing out in corridors of power for many years.

The high stakes pursuit for the mining rights played out behind the scenes in the offices of top government officials, particularly, in the ministry of Energy during the second term of President Kibaki’s NARC Government, prior to the announcement of the discovery of the precious mineral.

Kenya’s oil, just to scratch the history of it, was discovered by one Kengara Monena in 1987 while on a water drilling mission for a European aid agency. 

“We were drilling a borehole in one of the villages up north. As the drilling went on, we noticed what was gushing out of the hole was different. It even smelt different, like kerosene, and after a short while, the extracts changed from a clear liquid to a blackish liquid. At that time I knew it was oil,” Dr Monena is quoted in the Standard Newspaper that recently covered his tribulations in an article headlined, ‘Poor billionaire: how my discovery of crude oil in Turkana was stolen’. 

Several other places in the region, he says, yielded similar results. He resolved, together with his colleagues, not to spill beans on their find. 1987 was the period President Moi’s iron grip on the country had solidified. With the hatching of the clamour for multiparty democracy, those were dangerous times. They took samples of the black substance and sat back.

The multiparty democracy storm finally swept KANU from Power in 2002, ushering in a new dawn, and with it, a renewed hope for a rebirth. Dr Monena felt at home with the new regime. Time had come to let government in on his little secret. “I had all the coordinates. I knew Pokot and Turkana like the back of my hands,” he is quoted as saying.

Big mistake.

Through his company, Interstate Mining Company, he had forwarded samples to the Kenya Petroleum Refineries Ltd for testing, for which he received confirmation that indeed it was oil. 

In 2006, he reached out to the Norwegian Secretary of State for Energy and was referred back to the Norwegian Embassy in Nairobi. He also reached out to then Energy Permanent Secretary Patrick Nyoike whom he eventually met in a brief but detailed meeting.

“I was asked to give details of the location of my find including the amounts of the samples retrieved as well as another batch of samples for a new round of analysis. The PS then promised to get back to us,” he says. And his woes began.

With the help of the Norwegian government, Interstate Company in 2006 engaged in high-gear preparations for inevitable exploration and exploitation that loomed large on the horizon. They applied for exploration consents from the county councils of Pokot and Turkana. By mid-2006, permission was granted by both counties in writing and copies of the consent letters copied to the ministry of Energy.

A second and, interestingly, last communication to Monena from the ministry came in writing, signed by the PS, Nyoike. It read in part:

“The material you presented for testing was tested at the Kenya Petroleum Refineries Limited and was found to be black and very heavy. The sample was found to be heavier than the crudes processed at KPRL. It had significant amounts of water, which could not be separated in the KPRL laboratory and as a result, no distillation could be done on the sample…given this position, I am exploring other avenues for testing your sample. I will keep you posted on the progress.”

Unlike in other sample results from KPRL, this one did not come with  a chemical analysis report.

As interest from other companies, including Turkana Drilling Company (TDC), heightened in the blocks in which Monena had struck oil, Interstate pushed, and obtained grant for exploration permit into Blocks 10B and 11 from the county councils of Pokot and Turkana.

It became a cat and mouse game from then on, between Monena’s Interstate and Mwai Kibaki’s government, with the Ministry of Energy, then headed by Kiraitu Murungi, applying every rule known in the book to side-line Interstate. Consequently, Interstate’s Norwegian partners withdrew.

Monena’s Interstate Mining Company was never granted an exploration permit by the national government. No effort, including writing to President Kibaki yielded even a reply, leave alone their prayers for them. Instead, Turkana Drilling Company, an amorphous but well connected outfit, fronted by the PS, secured the exploration grant. There is evidence to show at least Sh100m changed hands for it.

The Kenya Government gives the National Oil Corporation of Kenya (NOCK) Sh100 million annually to undertake preliminary exploration surveys. Data from these surveys is then sold to various companies that might be interested in exploration. Monena believes that it is the data from his initial survey and test results from samples provided by Interstate that were sold to TDC. The PS Energy, it is instructive to note, sits on the NOCK board. Nyoike abused secrets of Interstate Petroleum and colluded with TDC to deny the latter an exploration permit.

Ownership of exploration rights as granted by the Ministry began changing hands in earnest from 2010. TDC sold its mining and exploration rights to Canadian firm Africa Oil Corporation for US$30 million.

Africa Oil Corporation and another of its sister companies, Centric Oil, sold half of their operations to Tullow Oil in the same year. That is how Tullow Oil gained mining rights to Blocks 10BA, 10BB, 10A, 12A and 13T. In 2012, Tullow increased its share in several of the initial five blocks.

And in early March 2012, the big oil companies got the President’s ear, resulting into that big announcement to the nation: “I have been informed by the minister that our country has made a major breakthrough in oil discovery…this is the beginning of a long journey to make the country an oil producer,” President Kibaki said.

The frenzy that accompanied that announcement, to quote the Standard newspaper, was enough to sweep away anyone who would challenge the legitimacy of the discovery.

But it is in the corridors of justice, where the tussle eventually spilled over to, that the worst had been reserved for Monena. 

There had been this deceiving belief in the country that the Judiciary, after the reforms that were instituted in the wake of the new Constitution, was reformed and beyond reproach. That was only on paper. Many a time, the Government has had both its say and way in any matter before the Kenyan courts in which it had interest. 

Interstate Petroleum Company Ltd instituted judicial review proceedings before the High Court at Kitale – JR 20 of 2010 – against the PS, Energy, seeking several orders including orders to quash an oil exploration permit granted by the PS in respect of the Blocks in dispute: 10BA, 10BB, 11A, 11B, 12A and 13T; to compel the PS to make full disclosure regarding information given by Interstate Petroleum Ltd relating to samples; to compel the PS to issue an exploration permit to Interstate Petroleum Ltd over the aforementioned blocks; to restrain interested parties from executing, whatsoever, the exploration permit issued by the PS and; to restitute the crude oil samples and/or the chemical analysis report to the Interstate Petroleum Company Ltd.

High Court Justice, Martha Koome, as she then was, was transferred to the Kitale High Court from Nairobi to replace Justice Nicholas Ombija, shortly after the latter had given leave of application. Sitting on October 16, 2010 she dismissed all the orders and condemned the applicant for seeking exploration permits while the interested parties had already been issued with production sharing contracts. What was interesting however, is the fact that no copy of the said production sharing contract was ever exhibited in court during proceedings. And with that, the door for lodging, course after course, was flung open.

Interestingly as well, Justice Koome was transferred back to Nairobi shortly after delivering the ruling. Long before she became a judge, the lady justice had worked closely in the Narc Party politics with Kiraitu Murungi, Minister for Energy at the time. 

The road to justice for Interstate Petroleum Co. Ltd in the Kenyan courts has been convoluted, long and treacherous. To date, there are numerous cases pending, even as the country celebrates its first consignment of crude.

*In our next issue, we detail the players involved from the ministry, Judiciary and National Environment Management Authority, as well as politicians who took and gave bribes to facilitate the fraudulent Petroleum Sharing Contracts

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