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Economy

Kenya’s first crude oil pipeline takes shape

Pact Energy secretary Charles Keter with Tullow Oil Vice-President ES Gary Thompson when they inked an export pact. PHOTO | DIANA NGILA | NMG
Pact Energy secretary Charles Keter with Tullow Oil Vice-President ES Gary Thompson when they inked an export pact. PHOTO | DIANA NGILA | NMG 

Kenya is moving towards construction of its first crude oil pipeline from Turkana oilfields to the Coast with the line design and environmental audit expected from July.

British oil explorer Tullow, the developer of the Turkana oilfields, yesterday said engineering studies and contracting are ongoing in preparation for the pipeline’s final design, dubbed front end engineering design (FEED).

Construction of the 865-kilometre pipeline between Lokichar and Lamu was estimated last year to be completed in the second quarter of 2021 at a cost of Sh210 billion.

The line will enable Kenya to pump out about 100,000 barrels a day for exports.

“The Kenya Joint Venture and the government of Kenya continue to progress the export pipeline commercial and finance studies and preparations are under way for the environmental social impact assessment (ESIA) and FEED, which are planned for the second half of 2017,” Tullow said in its update yesterday.

The joint venture comprises Tullow Oil, Canada-based Africa Oil and Danish firm Maersk which are jointly developing Kenya’s oilfields.

Turkana oil is classified as waxy and sticky, making it necessary to heat it during transportation, a quality that is expected to determine the design of the pipeline.

Kenya has so far struck 750 million barrels of oil, considered commercially viable, with ongoing exploration indicating the figure is likely to cross the billion mark.

Nairobi opted to go it alone in building the pipeline after Uganda, which originally favoured a route though Kenya, said it would build its line through Tanzania.

Kenya is banking on oil exports to earn the country the much-needed petrodollars and help stem the rising tide of public debt that now stands at Sh3.8 trillion or half the gross domestic product (GDP).

In the moment, the country plans small-scale oil exports (2,000 barrels per day) from June to test the receptivity of the oil in the global market, pending construction of the pipeline.

Petroleum principal secretary Andrew Kamau last week said the first sea tankers will dock at the Mombasa port in June to pick up the consignment transported from northern Kenya by road and stored at the Mariakani refinery tanks.

China and India have emerged as the main buyers of the Turkana crude oil.

Tullow has already pumped out and stored 60,000 barrels of crude in Lokichar in readiness for transportation to Mombasa.

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