A taskforce to oversee the compensation of affected families in Kisumu county has been formed.
The taskforce team will be comprised of leaders from the county and Tullow, Kisumu Senator Anyang Nyong'o has aaid.
The agreement comes after leaders threatened to reject oil exploration by Tullow, if compensation is not done fairly.
Nyong'o, MPs Aduma Owuor (Nyakach), James Koyoo (Muhoroni) and Fred Outa (Nyando) previously accused Tullow for not involving them in decisions on oil explorations.
They were speaking on Friday during a joint consultation meeting with Tullow company in Kisumu.
Governor Jack Ranguma said affected families must be well compensated before any exploration begins.
The meeting discussed the short and long term oil search prospects and its impacts to the residents.
Ranguma said the county government must be enjoined in the evaluation team for transparency. He said Tullow should not handpick an evaluation firm without involving the county government and local leaders.
Ranguma questioned the compensation procedure used by Tullow.
He called for an independent evaluation company to assess the extent of property damage associated with exploration.
Tullow said 6,000 families were affected in Muhoroni, Nyando, Nyakach and parts of Kisumu East, where survey was extensively conducted by the company.
The company had earlier said that those that are affected will be compensated basing on the kind of crops that was destroyed.
The crops massively damaged include sugarcane, maize, sorghum and vegetables among others.
Ranguma said the firm must honour the agreement seeking to involve residents in all stages of oil exploration.
Nyong'o said involving residents will reduce conflicts during exploration.
He said the Kisumu County Advisory Committee on Tullow investment will spearhead compensation process to ensure accountability.
"Investment is a long-term perspective and we must protect the interest of our people," Nyong'o said.
Kisumu county assembly majority leader Samuel Ong'ow accused the company for playing double standards over the compensation plans.
Ong'ow said the company is not genuine in its plans to compensate the affected families, whose crops were massively destroyed during oil survey.
He said the company has not carried out proper crop damage assessment and leaders should be involved in identifying the affected families.
"The company needs to present us with proper structure on how the residents will be compensated," Ong'ow said.
Tullow Oil Social performance manager Robert Gerrits said the company has conducted proper damage assessment and with compensation expected by July.
He said engagements with the local community would be enhanced to avoid conflicts.
Robert said Tullow has finalised the project survey and results will guide whether drilling will commence or not.
The company is currently analysing the damage assessment report to ensure that nobody is left out once the compensation process start, he said.