Last week a newspaper reported that Kenya would "strike oil within weeks" and attributed the news to Energy minister Kiraitu Murungi's remarks at the South-South Oil and Gas Conference.

I was at the conference and although I cannot recall Mr Kiraitu making the remarks, he did express strong hope that this time round we deserve an oil discovery.

I have followed oil prospecting in this country since the 1970s.

This time round I feel confident to place the prospect of discovering the fuel at 70/30.

This is informed by the fact that Total did, in the late 1980s, find traces of hydrocarbons at Isiolo and that the Chinese are drilling deeper.

An oil exploration and discovery has a cycle of activities and it may take as many as four years to realise revenue, depending on how well established government systems are.

The first step involves negotiations between the government and investors, then there is prospecting, drilling (which is what the Chinese at Isiolo are now doing).

Then if indeed there is oil, it has to be evaluated for quantity and quality.

If the quantities are commercial (large enough), decisions on development and financing are made.

This is followed by development of infrastructure to produce and transport the oil to markets.

Depending on the type of agreement signed with the government, it may take several more years before any income accrues to the state.

In 1989, retired President Moi flew back to Nairobi from Isiolo and excitedly announced that Total had struck oil , when in fact the firm had only found non-commercial traces of the fuel.

When two years ago Woodside was busy drilling off the Lamu coast, misplaced expectations and activism were evident among local communities.

What is important at this point in time is whether the government has sufficiently prepared itself, and indeed various stakeholders, just incase there is an oil strike.

Kenyans have high expectations, some of them quite wild, but this has to be anticipated and managed soberly so that activism does not become disruptive when oil is finally struck.

We have seen the examples of Tiomin and the Tana delta sugar project, where controversies delayed or derailed worthy ventures.

It would help if draft laws and policies, on how benefits accruing from oil and gas discoveries will be managed, are put in place. This is best done prior to the discovery.

A blueprint should be developed on how different stakeholders' expectations -- local communities, civil society, the media, advocacy groups, local NGOs, local governments, businesses -- will be met.

Pre-determined guidelines will help investors to determine their involvement as they sign various production agreements with the government.

All these aspects have an impact on investors' rate of return on their investment.

The policies and laws should include guidelines on the role of investors on subjects such as corporate social responsibility, employment and skills transfer, local materials supply, and construction contracts.

The many times I have travelled to Tanzania I have heard murmurs to the effect that the numerous gold mines in the country do not yield sufficient returns for the national coffers because mining agreements are skewed in favour of investors and against the national interest.

Similarly, an oil agreement not diligently negotiated could yield very little for the country.

I suggest that basic terms signed with an oil prospector should have a baseline income criterion agreed by a collective authority like parliament or cabinet, with stakeholders' input.

This brings me to the important subject of the Extractive Industries Transparency Initiative (EITI), which is a coalition of governments, companies, civil society groups, multilateral agencies and investors that advocate for good governance and transparency in the exploitation of natural resources such as oil, gas and minerals.

This global protocol promotes natural resource revenue disclosure at the local level.

According to the EITI website, only two countries are EITI compliant (Azerbaijan and Liberia), while Tanzania is in the second category of 28 countries that are in the process of becoming compliant.

There is no evidence that Kenya and Uganda have applied for accreditation to EITI.

Azerbaijan has a sovereign wealth fund financed by revenue from oil and gas.

The guiding principle for the fund is that income from oil should be saved and managed transparently and with full accountability and disclosure, on behalf of current and future generations.

The revenue is not used for routine budget spending such as through the consolidated fund, but is managed by an independent corporate entity through the stewardship of the central bank.

The funds are invested for the best returns internationally and locally, with their safety and security in mind.

A sovereign oil fund transforms natural wealth into a stream of permanent financial income for the country, which is insulated from day to day exploits and indiscretions of politicians.

In Azerbaijan, the sovereign oil fund is defined and protected by an Act of Parliament.

It is used for financing strategically important national projects or for resolution of critical problems of national dimension.

A sovereign oil fund will also protect macroeconomic stability by ensuring huge inflows of dollars, and other foreign currencies, that would otherwise bring about inflationary pressures.

Key parameters of such a fund are the disclosure and transparency through regular audits and publication of audited reports.

In Kenya, we still have a window of opportunity to do the right thing now -- before we are overwhelmed by the excitement of an oil or gas discovery.

Good laws and policies on oil resource sharing can be debated and adopted ahead of discovery.

Institutional capacity to manage and regulate oil and gas should in the meantime be developed to include expertise on international laws that deal with such resources, oil and gas contracts negotiation, and environmental protection.

A template on how to manage public expectations also needs to be prepared and discussed with stakeholders.

Above all, Kenya should embrace membership of EITI as it encompasses all the positive aspects of good governance and transparency when it comes to matters of natural resources.

Unfortunately, Kenya is not blessed with this aspect.

If all the above thoughts are considered in good time before oil and gas are struck , then we shall be in a position to avert the evils that have wrecked some emerging oil and gas economies.

Wachira is a consultant with Petroleum Focus Consultants.