- During his short state visit to Kenya, Chinese President Hu Jintao found time to sign several bilateral agreements with his Kenyan counterpart, President Mwai Kibaki. Of an outstanding interest was however a deal allowing oil-hungry China to dominate the promising Kenyan onshore oil exploration.
President Hu was today received at State House in Nairobi by a Kenyan counterpart eager to bind the eastern power up in as many development deals as possible. President Kibaki after the ceremony announced that Kenya had secured Chinese grants worth several hundred million shillings in the sectors of economic and technical cooperation, health research and the urban development of Nairobi. Also cultural cooperation would be strengthened.
The Kenyan-Chinese deal that caused most attention nevertheless was signed between Kenyan Energy Minister Henry Obwocha and the state-controlled company China National Offshore Oil Corporation (CNOOC). The oil agreement secures China a leading role in the promising but under-developed petroleum sector in Kenya.
CNOOC was allowed to head the exploration of six onshore blocks covering 115,343 square kilometres in the northern and southern of part of Kenya. There have still not been made any exploitable oil or gas discoveries on these six blocks, but several international companies have demonstrated their interest lately, indicating that there is a large potential of finding major reserves.
Exploration investments in the six blocks, located in the basins of Lamu, Anza and Mandera, would commence within short, CNOOC indicated in a statement today. The Chinese state company emphasised its optimism ahead of operations: "This vast area has attractive untapped exploration potential, although it is not yet a mature oil and gas producing area," the CNOOC statement said. The signing indicated CNOOC had successfully extended its overseas exploration activities to East Africa, it added.
The Kenya Energy Minister added that the deal had been very favourable to the Chinese state company. CNOOC would not have to pay any other costs than its wn exploration costs during the 20-year deal, Mr Obwocha explained. Only if oil really was found, new agreements would be signed, aiming at production-sharing between CNOOC and a Kenyan state company.
Presidents Hu and Kibaki witnessed the signing of the oil deal between Minister Obwocha and the CNOOC President. The signing of the oil exploration agreement was widely seen as the climax of President Hu's two-day state visit to Kenya by the Chinese press. China is in desperate need of oil for its fast growing industry.
In Kenya, on the other hand, focus was on other bilateral agreements. President Hu promised to finance urban development schemes in Nairobi, including the rehabilitation of roads, street lighting and a sports stadium. Kenya further was to receive large amounts of anti-malarial medicine and a grant of half a billion shillings, which government is widely free to use as it seems fit - as contrasted to grants and loans from Western partners.
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