Research On Local Content Legislation Of Oil And Gas Industry In Kenya

Kenya,as a new oil producer,has formulated legislation on local content of the oil and gas industry in order to break the "resource curse" and promote economic development.At present,the existing legislation on the local content of oil and gas investment in Kenya mainly includes the Product Sharing Contract to adjust upstream oil operations,the Energy(Local Content)Regulations of 2014 regulating oil activities in the middle and lower reaches of oil,the Petroleum Act of 2019 regulating oil activities,and the local content Bill of 2018,which provides a unified legal framework but has not yet been promulgated.In terms of connotation,the definition of "local content requirements" is different from the local content requirement and the performance requirements,and is conducive to the protection of domestic childish industries;from the rule of International Law,the "local content requirements" is the embodiment of national economic sovereignty,the Kenyan government has autonomy over the specific provisions of this requirements,and promotes the sustainable development of Kenya’s natural resources.The main requirements of the local content legislations in Kenya oil and gas industry are: local procurement requirements,which require foreign investors to purchase local goods or services in Kenya with priority,the specific quantity limit of the purchase requirements changed from legislation to consultation,and even announced the quantity requirements according to the local situation changes;local employment requirements,including priority employment of Kenyan citizens,replacement schemes for Kenyan citizenship positions and training programs for Kenyans."Priority" could be achieved either by mandating a specific number of local Kenyans to be hired by foreign investors,or by limiting the entry of foreign labour by reducing work visas;technology transfer requirements,including requiring the foreign investor to transfer technology to Kenya on a self-designed technology transfer,or for foreign investors to undertake local technology research and development in Kenya,or to donate funds for technology R & D to Kenyan.In addition,the Kenyan government has stipulated a regulatory system and punishment system for mandatory local content requirements.The need for Kenya’s economic development,the conflict between the central and county governments over the attribution of oil and gas revenues,and the application of international trade and investment rules in Kenya will all have an impact on local content legislation.For example,the Kenya Vision 2030 affirms the role of oil and gas resources in promoting the economic development of Kenya.It will further promote the legislation on the local content of the Kenyan petroleum industry.The Turkana oil field incident shows that resource communities expect more from oil and gas resources.To avoid conflicts between the central and county governments,Kenya will enhance the rights and interests of local communities.International trade and investment rules and restrictive provisions of developed countries on local content requirements will drive Kenya’s local content requirements to be flexible.New legislative amendments such as "decentralization to the local authorities","establishing an independent local content regulatory agency" and "increasing the community hearing system" will not only enhance the local rights and interests of the county where the resources are located,but also promote the diversification of the regulatory system required by the local content of Kenya’s oil and gas industry.Therefore,in order to cope with the legislation and future development of local content in Kenya,The Chinese enterprises investing in Kenya should actively fulfill their corporate legal and economic responsibilities to implement the requirements of community composition in Kenya;strive to agree on stabilization clauses in investment contracts such as the Product Sharing Contract to meet the local content requirements frequently formulated by Kenya;and actively rely on the technical personnel training project agreed by the Forum on China-Africa Cooperation to deal with the local employment requirements of the oil and gas industry and obtain the relative advantage of technical personnel reserve,so as to effectively reduce the investment loss caused by the local content requirements.