African countries urged to update oil investment laws

African countries will gain more from oil related investments if they fast track revision of oil exploration laws and regulations to attract more oil industry investors, a development analyst has said.At least five African countries, Ghana, Mozambique, Namibia, Uganda and Kenya have announced discovery of oil in the recent past while exploration activities ongoing in more than a dozen African countries are expected to add more oil producers in the continent. Oil investment laws in most of the African countries have been gathering dust after failed efforts to strike oil since independence in 1960s. The laws in countries like Kenya and Uganda are those that existed nearly 50 years ago. The new discoveries however, the latest being in Kenya, have raised the urgency of updating the laws as more investors troop into the continent to prospect for the commodity. Investor interest in production, refining and associated infrastructure, while still peaked, is being restrained by outdated and insufficient government policies that govern the extraction, production and trade of hydrocarbon resources, said Hendrik Malan, the Operations Director in Africa for global consulting company Frost & Sullivan, in an email interview with Xinhua.Kenya has announced plans to review its oil laws in the face of the new discovery that is being tested to see if it is of commercial value. The country is expected to borrow best practices from countries that have successfully managed their oil wealth. The discovery in March in the northern region of Turkana was made by British oil company Tullow Oil, the same that discovered 3 billion barrels of oil deposit in the neighbouring Uganda. The discovery of significant amounts of hydrocarbon resources in these countries has driven significant investor interest in the exploration of oil and gas resources in Eastern and Southern Africa, said Malan. The development of set regulatory policies and associations for the development and commercialization of oil and gas fields will be the first step in stimulating investor confidence and providing a foundation for future investment in the sector, he added. In addition to holding back investors, lack of laws and regulations on oil investment has become a source of conflict in some African countries, as accountability of oil revenues by the government is compromised. The advantage with countries like Kenya that are newly discovering oil reserves is that they have an opportunity to learn from success cases and will not repeat the failures of other countries. Alex Vines, Research Director and Head of Africa Programme at global Think-Tank Chatham House said if Kenya is to fully benefit from oil and avoid the resource curse that many other oil producers have experienced, it requires having effective laws and embracing transparency in the management of oil revenues. Some of the lessons are very clear, like not rushing into prestige projects and extravagant consumption. Kenya needs to strengthen independent institutions and oversight, and publish all the taxes and royalties from oil, he said. Xinhua