NAIROBI, Kenya

RECENT petroleum finds in Kenya’s arid and under-developed north have caused excitement, but even if commercial production goes ahead, major challenges remain.

Kenya will need to invest in human resources, manage often unrealistic expectations and beef up infrastructure, preferably in conjunction with its neighbours, experts say.

East Africa has long lagged behind the west of the continent where oil was found back in the 1950s.

But in recent years Tullow Oil of Ireland has struck oil in the east, first in Uganda, where confirmed reserves of 1.7 billion barrels are located, and now, they hope, in Kenya.

“Companies have passed commercial thresholds,” in Kenya, said Mwendia Nyaga, an independent consultant.

But given that they still need to work out the costs of extracting what they have found, Kenya has not yet officially “declared commercially viable resources”, he said, even if companies see a “high possibility of production”.

“In 2006, there was very little exploration onshore. The main operation was offshore,” Nyaga said. “Today, every single licensing opportunity onshore has been taken.”

Kenya has four basins: Anza, Mandera and the Tertiary Rift, where the Turkana oil finds lie, are all completely onshore, while the Lamu Basin extends offshore.

“The geology tells us that there is oil in the Great Rift Valley, running up and down,” David Cowan, Africa Economist at Citigroup in London, told AFP.

Kenya no longer attracts only independents such as Tullow. Majors such as Total of France and Italy’s Eni have started moving in.

“In East Africa the problem is not geology. Rather, the question is what to do with the oil and gas produced,” said Stanislas Drochon, analyst at IHS.

“For oil the difficulty is that the region is landlocked,” he went on, referring to Uganda, Kenya’s Turkana region and neighbouring South Sudan, which sends out its oil via Sudan.

For Kenya’s Turkana region, populated largely by pastoralist communities who fight over land and water resources, all the infrastructure for getting oil out still has to be put in place.

Uganda, Kenya and Rwanda are currently in discussions over a pipeline network that will connect with a planned new deep-water port on the Kenyan coast.

The legal and regulatory framework in Kenya also needs beefing up, experts said.

A new version of Kenya’s petroleum law, last revised in 1986, is being drawn up, notably in light of new environmental requirements.

It will create a new upstream regulator and strengthen a number of other bodies, with the aim of leaving the ministry in charge of policy and creating a petroleum directorate responsible for ensuring that companies stick to the terms of their contracts.

The existing National Oil company NOCK will be the joint venture partner with oil companies.

Kenya also has human resources issues to address, including the inclusion of local communities who expect to see a share of the oil wealth.

“Kenya has comparatively well-trained human resources, you have engineers, but they haven’t worked in the oil industry. You’ll find plant operators, but you’ll have to teach them the oil industry,” Mwendia Nyaga said.

“One of the big challenges in the region is managing the huge expectations,” said Drochon. “People expect to see prices at the pump drop immediately whereas anything to do with oil takes a long time.” he said.

The Kenyan government says it is aware of the dangers and is putting in place measures to guard against them.