Potential Petroleum Revenues for the Government of Kenya

Implications of the Proposed 2015 Model Production Sharing Contract Analysis

Implications of the Proposed 2015 Model Production Sharing Contract Analysis. Graphic credit: Inuka Ni Sisi
Paper author: 
Don Hubert, PhD
Paper publication date: 
Friday, April 1, 2016

The Petroleum (Exploration, Development and Production) Bill, 2015 and associated model production sharing contract (PSC) are currently in the final stages of Parliamentary review. The development of a new regulatory framework for the petroleum sector was driven by the need to modernize a regime that was first established in 1986 and to take into account recent discoveries of both oil and natural gas.

Of the changes proposed in the 2015 Bill and model PSC, the focus of this analysis is on the fiscal terms; that is the sources of Government revenue and the specific terms applicable to them. The new fiscal system that would apply to PSCs negotiated in the future will be significantly different than the one that applies to all existing PSCs, including those for the promising blocks in the Turkana region.