The government is looking at possibilities of increasing the lease amount paid by Oil explorers, the Finance Minister Njeru Githae has said. This comes in the wake of Tullow Oil Plc having struck oil at Ngamia 1 well in Turkana on oil exploration Block 10BB.
There has been widespread allegations that Turkana Drilling Company, a company associated with a minister sold Block 10BB for $10 million (Sh840 million) to Africa Oil, the block that hosts Ngamia 1 well. Githae said the government is not going to allow speculators to acquire exploration blocks for the sake of making a kill.
“We are looking at possibilities of increasing the leasing fee and also put a time line for the explorers where at the end of a one year period the lease period automatically lapses,” Githae said. He said this will discourage small companies that do not have the ability and interest in exploration and drilling from acquiring oil blocks.
The minister said that companies that acquire exploration blocks are expected to have set up and drilled within a period of one year. Those that would not have set up within the specified period will have their lease agreements canceled and will not be considered for further exploration programs.
Tullow Oil Plc operates block 10BB with Africa Oil on a 50-50 basis partnership.
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