Kenya Reviews Oil, Gas Revenue Sharing Formula

The East African

Government officials in Kenya are discussing a model of sharing that is calculated on profitability (R-factor) vs. volumes of oil brought to the surface. John Beardsworth points out, “With a progressive R-factor, if a discovery is not made, the investor's loss is limited to costs incurred during exploration phase.” Beardsworth focuses his practice on energy and infrastructure transactions and project finance.

On behalf of the Government of Kenya, the World Bank hired Hunton & Williams, along with Hunton’s UK-based technical subcontractor Challenge Energy, to evaluate oil and gas legislation in Kenya, and to develop a modern and competitive legal, regulatory, and fiscal framework for Kenya based on international and regional best practices. The team proposed draft changes to Kenya’s petroleum sector legislation and regulations that will modernize the way Kenya works with oil and gas contractors.