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Kenya’s oil export plan pushed to 2018

Plans by Government to export crude oil produced in Turkana County on a pilot basis have been further delayed. This means exportation is now expected to take place next year.

Tullow Oil, which will undertake the pilot project on behalf of the Government, yesterday said trial would kick off early next year. This is against expectations that Kenya would ship out the first barrel by end of 2017.

The Ministry of Energy and Petroleum had planned to start exporting through the Early Oil Pilot Scheme (EOPS) in June this year but it was called off owing to unpreparedness. The ministry had then expected to resume by around September or October this year after parliamentarians settled in after elections and passed the Petroleum Bill, which the ministry said was critical to allow the pilot project to move forward.

Last month, Energy Cabinet Secretary Charles Keter said the programme would start in December. Tullow, however, said the programme can only start next year.

“Early Oil Pilot Scheme (EOPS) is now expected to commence early in 2018,” said the UK-based exploration and production firm in its trading update.

“As part of EOPS extended production, water injection testing and a water flood pilot test utilising the Ngamia-11 well are planned for the first half of 2018. Produced oil will initially be stored, until all work is completed and necessary consents and approvals granted for the transfer of crude oil to Mombasa by road.”

The plan entails movement of the crude oil produced at Lokichar by Tullow Oil using road to Mombasa and stocking it at the Kenya Petroleum Refineries Limited (KPRL) until it is adequate to be shipped out. According to the ministry, the exercise is expected to inform on the nature of Kenyan’s oil as well as reaction from the market but will be a loss making one.

In addition to planned production, Tullow has already produced some 60,000 barrels of oil that are stored in its facilities in Lockichar. It had also signed contracts with three firms that would provide specialised tanktainers and trucks that would move 2,000 barrels of crude per day from Lokichar to Mombasa.

The project also faces the challenge of inadequate road infrastructure, with much of the road between Kapenguria and Lodwar being in a state of neglect.

Insecurity

While the Government last year gave contractors the job of building the road and was expected to be ready in the course of 2018, nothing has moved. The contractors cited insecurity as a key challenge, with one of them having lost staff to bandit attacks.

The collapse of the bridge at Kainuk on Monday this week has cut Turkana County from the rest of the country. Andrew Kamau Principal Secretary Petroleum yesterday said the challenges notwithstanding, the ministry would push ahead with the pilot.

“We will fix the bridge and we will start to move,” he said.
Source: Standard Media

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