Kenya Gives in to Crude Oil Firm Pressure as KPC Opens Tenders for Exports

The Kenyan government has been under pressure from London-based oil explorer Tullow and to resolve a dispute over the sharing of revenues between Nairobi and the local community.

Preparations for Kenya’s planned early export of crude oil are now underway. On 27th March 2018, the government through Kenya Pipeline Company (KPC) has published a notice inviting tenders for the update of the existing pipeline that connects Mombasa’s onshore storage to the Indian Ocean ship loading facility. The upgrade of the existing pipeline will see Kenya transport 2,000 barrels of crude oil to Mombasa by road on a daily basis.

For the Early Export Plan to be executed, modification of the existing anti-corrosion pipeline to accommodate a heating component will be required. The heating component is necessary for the free flow of the waxy crude oil to the ships. The pipeline will also be insulated to avert heat loss to the ground.

The British explorer-Tullow Oil- affirms to investing roughly Kshs100B in Kenya over the past six years. This massive expenditure clearly indicates the vast revenues that the company will recoup when the EOPS kick-starts not talking of the colossal proceedings that will trip in the company when large-scale exportation commences. The company is pushing for implementation of the Early Oil Pilot Scheme (EOPS) to enable it test and profile its wells, start recovering its investments and halt its loss-making stream.

The pipeline set to be upgraded is of 18-inch length and will run 4.5km between the unused Changamwe refinery and Kenya’s main docking facility for Indian oil tankers-Kipevu oil terminal. Since Uganda has also announced its plans to start its early crude exports later this year through the Kenyan port, the neighboring country will benefit from this refurbishment as the new pipeline will handle both Kenyan & Ugandan waxy crude.

Kenya has made an export agreement with Tullow Oil, Maersk International and Local Africa Oil which already have 700,000 barrels in store to be used for the pilot program. The agreement will hopefully fasten the pilot export to start in June. The government is embarking on a pilot program to test the outside markets before going for large-scale exportation.

Large-scale exports are projected to commence in 2021 or 2022, with the company estimating production at its Amosing and Ngamia wells to range between 60,000 and 80,000 barrels per day.

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