British exploration firm Tullow says it backs the move to export 2,000 barrels of crude oil per day by road, saying the Early Oil Pilot Scheme (EOPS) will give them the vital information they need for full scale production.
The firm says its joint venture agreement with African Oil, Maersk Companies and the Kenyan government gave the greenlight to the programme which has in recent months faced opposition from some fronts.
The ESOP plans to utilise five existing wells to produce oil, with phase one targeting 2,000 barrels each day.
The product will be transported to Turkana and Mombasa via road in insulated tankers, according to the government.
“The EOPS, which involves the transportation of early South Lokichar oil production to Mombasa by road, has been sanctioned by the JV partners,” Tullow said in a statement Wednesday.
“The scheme will use existing upstream wells and oil storage tanks to initially produce approximately 2,000 barrels gross in mid-2017. This early pilot scheme will provide important information to assist in full field development planning,” it added.
"Not cost effective"
Some critics of the programme have faulted the government, saying transporting such minimal amounts of oil via road is not cost-effective.
The 2,000 barrels of oil per day will translate to Sh8.3 million and Sh3 billion annually based on World Bank crude forecasts of $41 per barrel and assuming the wells run daily.
Organisations such as the Kenya Civil Society Platform on Oil and Gas (KCSPOG) have questioned the government support of the program despite its marginal benefits and minimal data available to back the plan.
Energy principal secretary Andrew Kamau says EOPS will help the JV partners to establish “logistical and technical infrastructure (such as roads and bridges) and other key arrangements crucial for supporting Full Field Development (FFD).”
“EOPS is an enabler and not a replacement for the FFD, which will include the Lamu Port-South Sudan-Ethiopian Transport (Lapsset) corridor projects, a crude oil pipeline from Turkana to Lamu carrying between 80,000-150,000 barrels of oil per day,” Mr Kamau said in an opinion piece last month.
“Although it will be a small scale project, the scheme will mark the first major milestone in Kenya’s oil and gas industry, which is that of producing and exporting crude oil for the first time in the country’s history,” he said.