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The East African : Apr 13th 2015
The EastAfrican BUSINESS APRIL 11-17,2015 MININ G Land conflicts persist as Bills delayed Investo≥s and ≥esidents clash ove≥ mine≥al, owne≥ship and managing expectations By KENNEDY SENELWA Special Correspondent K enya’s delay in legislating communal land rights could result in clashes over minerals between investors and residents of arid and semi-arid areas. The advocacy group Friends of Lake Turkana says lack of legislation on how mineral exploration should blend with land reforms has already led to a clash of interest between investors and communities and is likely to ignite tensions. The Senate’s Community Land Bill is set to go for its third reading, and a similar document drafted by the Ministry of Lands is yet to get Cabinet approval and go to parliament for debate. Firms that are exploring or extracting minerals in arid and semi-arid lands (ASALs), covering about 80 per cent of Kenya, have to balance their own interests with those of the residents as the land is communally owned. The Land Development and Governance Institute (LDGI) says disputes over mineral rights could hamper Kenya’s quest to develop its mining industry due to the slow implementation of land and natural resources reforms. The 2010 Constitution requires community land law to be put in place within five years; the deadline is in five months. “The issue is whether this is by accident or a strategy to derail and slow down the process of formulating community land law,” said LDGI chairman Ibrahim Mwathane. He said the government needs to manage community expectations of how they can benefit from the mining secto≥ ≥ound-up Pancontinental serves notice to withdraw from Lamu block Pancontinental Oil & Gas NL of Australia has served BG Group notice of withdrawal of its exploration interest in Kenya’s offshore block L10B. BG and Pancontinental hold a 75 per cent and 25 per cent stake respectively in Lamu Basin’s acreage L10B, in which the joint venture drilled the offshore Sunbird-1 discovery well in 2014. Sunbird-1 encountered 14 metres of crude oil below 29.6 metres of natural gas in block L10A, which is owned by BG (50 per cent), Pancontinental (18.75 per cent) and Thailand’s state owned PTTEP (31.25 per cent). More exploration work is expected to be done in acreage L10B. Pancontinental’s chief executive officer Barry Rushworth said the firm has enough exposure to the area’s prospects through its 18.75 per cent equity in block L10A. Shanta Gold secures $40m loan facility from Investec Bank Ngamia exploration site in Turkana, Kenya. Picture: File industry. Tullow Oil has discovered 600 million barrels of oil in northwestern Kenya, and large parts of the country’s ASALs have potential for gold, iron ore and manganese. Ujamaa Centre, which advocates a non-conflict approach to dealing with land issues, said promoting community rights is key to peaceful co-existence, improving livelihoods and promoting development. “The extractive sector is a new frontier for conflict, if communities are excluded from decision making and management of resources on land they have always considered theirs,” said Ujamaa’s development consultant Eunice Adhiambo. Prospects for minerals in counties like Turkana and A draft Petroleum Bill, covering exploration and production, is yet to be approved by the Kenyan Cabinet Baringo make it vital for Kenya to have a comprehensive communal land law. “Minerals are being discovered on land where people live, yet communal lands laws are not in place. The fear of exploitation and being driven off their land could harden the attitudes of people to mining,” said Mr Mwathane. The Mining Bill for prospecting and extracting of iron ore with other minerals has already been approved by the National Assembly, and is set to go for the third reading in the Senate. The draft Petroleum Bill, which covers exploration and commercial production of crude oil and natural gas, is yet to be approved by Kenya’s Cabinet in order to be forwarded to parliament for debate and legislation. It is expected that once the Mining, Petroleum and Community Land Bills are passed, the extractives sector will be more attractive to investors. Ikal Angelei, the director of Friends of Lake Turkana, said the challenge of not having a community land law is exacerbated by the Trust Land Act contradicting the provisions of the 2010 Constitution. “The rushed effort to pass other Bills influencing community rights before the Community Land Bill has far-reaching effects on how investors, communities and government deal with mineral rights,” she said. Oil exploration has an effect on other facets of community life like grazing practices, availability or use of water, and prevailing social and cultural practices. “Investors should be aware of local dispute resolution mechanisms used over the ages by residents around the exploration areas, and capitalise on using them before resorting to other forms of resolution,’’ said Ms Angelei. She said disputes related to land boundaries in northwestern Kenya are usually linked to sharing resources such as land, water, and pasture. Ethiopia plans to expo≥t natu≥al gas by 2017 ETHIOPIA PLANS to commence commercial production of natural gas in the Ogaden basin, and export it through neighbouring Djibouti by 2017. The Calub and Hilala fields located in the Ogaden basin in southeast Ethiopia have deposits of 4.7 trillion cubic feet (TCF) of natural gas and 13.6 million barrels of associated liquids discovered in the 1970s but not yet exploited. In the past four years, several companies have acquired licences to explore more than 40 blocks throughout Ethiopia. Ethiopia’s Prime Minister Hailemariam Desalegn said studies show the existence of natural gas reserves in several places, and promised that the hydrocarbons deposits will gradually be developed. “A Chinese firm is carrying out activities on Calub and Hilala reserves. In the next two years, we plan to start exporting and using natural gas from these areas,” he said. GCL-Poly Petroleum Investments of Chi- na on November 16, 2013 signed production sharing agreements with Ethiopia’s Ministry of Mines to develop the two fields. “GCL-Poly Petroleum Investments will fund the pipeline that will transport gas to Djibouti at a total cost of more than $4 billion, of which $3 billion will be invested in the Djibouti section,” said Djibouti’s Energy Ministry Communications Adviser Mohamed Nour. In February, Djibouti’s President Ismail Omar Guelleh and Mr Desalegn signed an agreement to construct a cross-border pipeline from Ogaden basin to the Red Sea port. The leaders also signed a joint operating agreement for the pipeline with POLY-GCL Petroleum. “POLY-GCL will co-operate in building a natural gas pipeline from the Ogaden basin in Ethiopia to Djibouti, where natural gas will be processed in a marine terminal and transported all over the world,” states the agreement. The contract area of POLY-GCL in Ogaden basin includes two development blocks and eight exploration blocks covering 117,151 square kilometres. The project involves oil and gas exploration, development and construction of a pipeline with natural gas liquefaction plant in Djibouti. Phase one is expected to reach three mil- lion tonnes per annum, and byproduct condensate oil production of 0.3 million tonnes per year. London Stock Exchange listed Shanta Gold Ltd has secured a $40 million loan facility from the corporate and investment banking division of Investec Bank Ltd. The loan, which is still subject to approval from the Bank of Tanzania, is expected in the near future as Shanta owns the New Luika and Singida gold projects in the country. The facility has a five-year tenor with interest at the London Interbank Offered Rate plus 4.9 per cent per annum. Some $20 million will be used to refinance a loan from FBN Bank (UK) Ltd. The balance will be a standby facility to be used when required. Shanta’s outgoing CEO Mike Houston said the facility will provide the company significant financial flexibility. 37 A gold mine at Meremeta, Tanzania. Pic: File Premier African Minerals licensed to operate tungsten project Zimbabwe has allowed Premier African Minerals Ltd to operate a tungsten project expected to start production in June. Premier owns 49 per cent of RHA Tungsten mine, and the government granted the permission after the Environmental Management Agency of Zimbabwe approved the project’s environmental-impact assessment. “The granting of permission to operate on time and under budget further demonstrates the commitment of the National Indigenisation and Economic Empowerment Board,” said Premier’s CEO George Roach. The project is being developed at a cost of $4.15 million. Petroleum exporters lobby producers to reduce output African petroleum exporters have started lobbying oil producers to reduce output to boost prices that have fallen to levels threatening to spark social unrest. Angola and Algeria are leading the African Petroleum Producers Association (APPA) initiative of calling on producers to reduce output as crude oil prices have declined to less than $60 per barrel from $115 in June 2014. Equatorial Guinea is revising its budget due to the prevailing situation. The price decline accelerated in November after Saudi Arabia, the largest producer, persuaded several members of the Organisation of Petroleum Exporting Countries to stick to its output levels and defend market share. “The council expresses its deep concern faced with this situation of falling crude prices, which hurts the economies of members and non-members of OPEC with the risk of social crisis if they continue,’’said APPA spokesman Ousmane Doukoure.
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