Legal and Regulatory Framework
The Petroleum Act. Cap. 308
The Act provides a framework for the contracting, exploration, development and production of petroleum; cessation of upstream petroleum operations; to give effect to relevant articles of the Constitution in so far as they apply to upstream petroleum operations, regulation of midstream and downstream petroleum operations; and for connected purposes.
Model Production Sharing Contract (PSC)
The model PSC provides the framework for negotiations of terms with oil exploration companies in Kenya. The Cabinet Secretary responsible for petroleum enters PSCs with oil exploration companies on behalf of the National Government.
- Contract (PSC) Terms
| Period | Onshore/ Shallow Offshore (6 Years) | Deep/Ultra Deep Offshore (7 Years) |
| Initial Period | 2 Years | 3 Years |
| First Addition Exploration Period | 2 Years | 2 Years |
| Second Addition Exploration Period | 2 Years | 2 Years |
- Expected Minimum Work Obligations
Contractors are expected to fulfill certain Minimum Work and Expenditure obligations for each exploration period. Contractors are also required to deposit 50% Bank and 50%. Parent Company Guarantees to guarantee minimum work and expenditure obligations.
| Period | Obligations Under PSC |
| Initial Exploration Period | Conduct a geological survey and acquire airborne gravity and magnetic full tensor gradiometry (FTG) data across the block. |
| First Additional Exploration Period | Acquire 2D/3D seismic data and drill an exploratory well over an identified prospect. |
| Second Additional Exploration Period | Acquire additional seismic data and drill a well. |