Kenya gears up for early oil export, downplays hurdles
What you need to know:
Maintenance of the road from the oilfields is only 20 per cent complete.
Another challenge is that Kenya’s crude is waxy and requires heating during transportation and storage.
Kenya’s plan to export its first cargo of 20,000 barrels of crude oil by looks be an uphill task even as officials remain optimistic.
A 296km road linking the oil fields in Lokichar, Turkana in the northwest of the country to Kitale town is only 20 per cent complete, and the government has now resorted to an “emergency upgrade.”
The incomplete road, coupled with insecurity in the region, could hamper the ambitious plan to get the oil to Mombasa by May, a month earlier than the initial projection of June.
“Two wells in Amosing field and three wells in Ngamia field are set to be used in oil production scheme (EOPS). Discussions are currently being held with maritime transport providers to export the first cargo 20,000 barrels of crude in May,” said Energy Principal Secretary Andrew Kamau.
He said the output of 2,000 barrels per day (bpd) of crude was aimed at helping the country build international market ahead of Kenya moving to the stage of commercial production of 100,000 bbl/d of oil either in 2020 or 2021.
Another challenge is that Kenya’s crude is waxy and requires heating during transportation and storage.
“We are looking at amount of temperature to heat the waxy crude in order to conform to standards of refineries in European and Asian countries,” said Mr Kamau. Global acceptable loss of crude is 0.03 per cent of volume loaded.
The crude will be stored at Kenya Petroleum Refineries Ltd and pumped to the Kipevu Oil Terminal where sea tankers will take it to export markets.
However, the state of the road from the oilfields is a major risk factor.
Kenya National Highways Authority (KeNHA) is upgrading the 296kilometre road from Leseru in Kitale in the western region to South Lokichar crude basin in north west to facilitate the early EOPS. KeNHA engineer Philimon Kandie, who is in charge of upgrading said the government was undertaking emergency maintenance works at a cost of $310 million.
“Despite insecurity challenges, 20 per cent of the works are complete. Upgrading is divided in seven lots awarded to different contractors to make sure the exercise is completed by April,” he said.
The road from South Lokichar through Kainuk bridge to Leseru is being made motorable by using murram sealed with bitumen after the surface is compacted by earth rollers.
A new bridge is being built at Kainuk to bear the weight of flat bed trucks ferrying tanktainers filled with 130 barrels of crude A tanktainer is equivalent to a twenty-foot equivalent unit (TEU) container used for transporting goods.
Kenya’s oil is waxy but light and sweet due to its little sulphur content. Light fossil fuel produces high value products like liquefied petroleum gas, petrol, diesel and kerosene.
Kenya’s oil is in the same category as of Nigeria, fetching a premium. Bonny light from Bonny Island fetches $53.91 per barrel unlike Dar blend from South Sudan, which is discounted at about $10 to Brent crude, the global price setter.
“Each tanktainer will be filled with 130 barrels of crude to be transported to Mombasa. A tanktainer is equivalent to a twenty-foot equivalent unit container,” said Tullow Kenya country manager Martin Mbogo. He said 30 per cent of transport business of EOPS has been reserved for the local community.
Samples of crude oil discovered in Turkana county were sent to refiners in Asia and Europe who have already acknowledged the good quality of the fossil fuel.
“The wells in Amosing and Ngamia fields within South Lokichar basin will be linked to mobile early production facilities comprising of separation equipment to segregate water and other impurities from crude oil,” said Tullow’s head of communications George Cazenove.
He said crude oil will be pumped in flow pipelines to a central processing facility at Kapese for loading into tanktainers fitted with heating facilities to be transported by road to Mombasa sea port for storage.
Tullow Oil Plc and Africa Oil Corporation with Maersk Oil will produce 2,000 barrels of crude daily to be transported by road covering 1,089 kilometres to Mombasa for storage and export. The joint venture partners have found 750 million barrels of oil in South Lokichar straddling block 10 BB and 13T.
