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Big dollar oil remains elusive for Kenya

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Tullow Oil, the company leading oil exploration and drilling in Kenya, says construction of a pipeline by 2022 would kick off commercial production that will see up to 80,000 barrels pumped out per day. “Kenya’s recoverable reserves are estimated at 750 million barrels of crude and is considered commercially viable,” Tullow Managing Director Martin Mbogo observed .

But at a production rate of 2,000 barrels per day, estimates show that will take more than six months for Tullow Oil to produce enough crude oil from the fields of Turkana to fill up one oil tanker ship with a capacity of 400,000 barrels.

The first consignment of 600 barrels of crude oil is valued at Ksh4.5 million going by the average market price with the shipment expected to bring closer to reality the dream of Kenya joining the exclusive club of oil producers.

The Ministry of Petroleum and Mining said it is targeting production and stockpiling of at least 400,000 barrels of oil before commencing exporting. Petroleum Principal Secretary Andrew Kamau said such a quantity, although modest in volume, was still ideal, considering it was the country’s first oil export consignment.

During the pilot phase, Tullow Oil will produce oil from two fields of Ngamia and Amosing. There are currently about 70,000 barrels stored in Lokichar that were produced during an extended well testing programme in 2015.

This consignment will form the first cargo to be trucked before Tullow embarks on a daily production of 2,000 barrels.

Oil could account for about a tenth of Kenya’s government revenue, at par with its biggest current export, tea, once production reaches its peak, officials say. Production is expected to start in 2022.

Petroleum Principal Secretary Andrew Kamau says the Government of Kenya is not tendering for the oil project in Turkana because it is a private partnership. Mr Kamau said the government’s job in the oil project is majorly facilitation as well as infrastructural to ensure that Kenya begins to export oil by 2022.

The Turkana oil project was a joint venture between Total Kenya, Tullow and Africa Oil. The government explained that the Early Oil Pilot Scheme (EOPS) was not a commercial project and as such Kenya would not get any money from since it is a geological experiment.

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Kenya is using the Early Oil Pilot Scheme, which will soon be followed by the Full Field Development phase, to establish itself as a crude oil exporter in the region and provide valuable information for future exploration and development.

“This early oil is expected to test Kenyan crude oil in the world market, and its main aim is not revenue sharing,” said the PS during an operational update held in Nairobi.

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BT Correspondent
BT Correspondenthttp://www.businesstoday.co.ke
editor [at] businesstoday.co.ke
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