interesting read, page-3

Machinations of the Kenyan government on fees...


http://uk.reuters.com/article/2012/11/14/kenya-oil-exploration-idUKL5E8ME2DU20121114

The proposal announced by Kenya's energy minister is one of many the government has put forward in the past month to increase the state's take from oil and gas resources, including new capital gains tax rules, a more competitive licensing process and higher fees for petroleum explorers.

At present most of Kenya's contracts with oil explorers give state-owned National Oil Corporation of Kenya (NOCK) a 10 percent stake in the production business once commercial quantities of oil or gas are found. This means that NOCK contributes 10 percent of production costs and receives 10 percent of profit.

However, the government now wants companies to give NOCK an initial 10 percent stake, increasing to 25 percent once production has started, Energy Minister Kiraitu Murungi told reporters on the sidelines of an east African oil and gas conference organised by Global Event Partners.

Rajesh Shah, an oil and gas expert and at PricewaterhouseCoopers, said it was unclear whether the rule would scare off potential producers because contracts are based on one-on-one negotiations with companies and the Ministry of Energy.

"It depends on how it's structured and how it's sorted out," Shah said. "I think people will get wary if it's getting something for nothing. If there's a fair share of whatever somebody has spent ... I think people will be pragmatic and see it as something reasonable."