The Energy and Petroleum Regulatory Authority (EPRA) has begun the process of hiring an independent firm to audit oil production costs in Turkana, as Kenya prepares to start commercial oil production later this year.
In a notice issued on April 28, the regulator invited applications from qualified companies to carry out a Petroleum Cost Recovery Audit. The audit will focus on firms involved in oil production and is expected to play a key role in how revenues are shared between investors and the government.
At the centre of the audit is the need to ensure that oil companies only recover genuine costs from their operations. Under Production Sharing Contracts (PSCs), companies first deduct their expenses before sharing profits with the government. EPRA says the audit will help confirm that all claimed costs are valid and within the agreed terms.
The exercise is also meant to stop possible manipulation of costs. Auditors will review expenses such as invoices and project spending to detect any inflated or ineligible claims that could reduce the government’s share of oil revenue.
Beyond checking costs, the audit will track how companies spend approved budgets and monitor Authorisation for Expenditure documents. This is expected to help flag overspending early and keep projects financially on track.
The auditors will also verify production figures and ensure that royalties paid to the government are accurate.
One of the key players in the Turkana oil project is Gulf Energy Ltd, which recently acquired a majority stake in the project from Tullow Oil. The firm is expected to lead the development of the multi-billion shilling project.
The government is also working with Gulf Energy under a government-to-government fuel deal that allows Kenya to import fuel on credit for up to 180 days, easing pressure on foreign exchange.
The move comes at a time when global fuel prices have been rising, partly due to tensions in the Middle East.
President William Ruto has described the Turkana oil project as a key step towards reducing Kenya’s dependence on imported fuel.
EPRA has set May 12 as the deadline for firms interested in the audit tender. Oil production in Turkana is expected to begin in December, marking a major milestone in the country’s energy sector.
