Kenya officially joins club of oil exporting countries

6th September 2019

By: John Muchira

Creamer Media Correspondent


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Kenya has officially joined the league of oil exporting countries after President Uhuru Kenyatta flagged off the first ship laden with 200 000 bbl of crude, worth about $12-million.

The ship – which left the Mombasa port last week – was bound for China, where the buyer was State-owned company ChemChina.

ChemChina won the bid after shrugging off seven other bidders representing European and Asian refineries.

The Chinese firm, which is the oil trading arm of ChemChina Petrochemical, undertakes crude oil trading, storage and procurement for ChemChina’s refinery companies.

“The [Kenyan] government will ensure that local communities benefit from the oil and that the fruits of the resource are shared in an equitable and sustainable manner,” said Uhuru.

Kenya managed to get a premium price for the sweet light crude, which sold at $60/bl, nearly 40% above the $43/bl that had been set as the breakeven point for the Early Oil Pilot Scheme (EOPS).

The export of the first crude from Kenya is a major milestone in the East African nation’s quest to benefit from the commodity, which was discovered in the northern part of Turkana in 2012.

It is also a big win for British firm Tullow Oil, which holds 50% of the oil producing project and has been pushing for exports in order to recoup its investment, estimated at $1.8-billion.

Kenya, however, contends that the EOPS is not a money-making venture but a necessary initiative as the country gears up for full development and commercialisation of the crude oil sector, which will culminate in the completion of a pipeline from the oilfields to the Lamu port in 2023.

The Kenyan government, Tullow Oil and its joint venture partners, Total and Africa Oil, aim to sign the final investment decision by the middle of next year to facilitate full field development.

Kenya is in negotiations with a consortium of financiers to raise $3-billion for the construction of the 18 inch, 821 km heated pipeline that will be buried underground.

Owing to the waxy nature of Kenya’s crude, the pipeline will be more expensive to build and operate than a conventional pipeline, because the crude will need to be heated along the line.

“The 2020 plan for a pipeline connecting Lokichar to Lamu is on track; we need more commitments on land and water to enable us to move faster with everything,” said Kenya’s Petroleum Cabinet Secretary, John Munyes.

Tullow estimates that Kenya’s onshore fields in Turkana host 560-million barrels of oil and calculates that up to 100 000 bbl/d will be produced from 2023.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor



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