Kenya oil production on course after agreement on revenue share

NAIROBI (Reuters) - Kenya will start the small scale export of crude oil from its fields in the far northern county of Turkana in June after an agreement on how to share the revenue, averting delays, the presidency said on Saturday.

Tullow Oil and its partner Africa Oil discovered commercial reserves in the Lokichar basin in 2012. Total has since taken a 25 percent stake.

A row had broken out after President Uhuru Kenyatta cut the share of the Turkana county government to 15 percent and that of the local community to 5 percent, leaving the rest to the national government.

He then met officials from Turkana at State House in Nairobi to strike a new deal, which will raise the county government's share to 20 percent and cut the national government's to 75 percent.

"We now have an understanding that can put Kenya on the map of oil exporting countries," Kenyatta said in a statement.

The deal will allow a long-delayed law on oil exploration and production to clear parliament, letting exports begin.

"We will intensify our exploration efforts not just in Turkana but in the rest of the country now that we have a legal instrument that can help guide how oil and gas will be handled in our republic," the president said.

The deal was struck after the national government agreed to eliminate a cap on the revenue due to the county government and the local community, said a senior government official.

Officials in Nairobi had proposed to cap the annual allocation from oil exports to Turkana, arguing that the local economy could not absorb a sudden influx of too much cash.

"The clincher was the removal of the cap," said Andrew Kamau, the principal secretary in the ministry of petroleum and mining.

(Reporting by Duncan Miriri; Editing by Andrew Bolton)