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Economy

Kenya oil exports loom as transport deal issued

A Tullow Oil exploration rig in Turkana. FILE PHOTO | NMG
A Tullow Oil exploration rig in Turkana. FILE PHOTO | NMG  

Movement of crude oil from Turkana fields to Mombasa port on road will start mid-this month after three Kenyan companies won lucrative contracts to provide trucks and oil tank-tainers.

Petroleum PS Andrew Kamau said yesterday this is the final phase of the early oil export journey that seeks to test Kenya’s crude in the global market.

Nairobi-based Primefuels Ltd bagged the tender to supply 100 tank-tainers, each with a capacity to carry 150 barrels of crude. The firm is a subsidiary of Dubai-based Primefuels Group.

Suppliers of trucks, on which the tank-tainers will be mounted, include Multiple Hauliers (EA) Ltd and Oilfield Movers Ltd — where former CEO of State-owned National Oil, Mwendia Nyaga is a director and founder.

The two companies will each provide 23 trucks.

“With the contracts award, oil transportation is expected to begin anywhere around mid-this month,” said the PS on phone from the US where he is on an official trip.

“We are in the meantime time engaging the community ahead of the crude movement.”

British explorer Tullow oil, the developer of the Turkana oilfields, has already pumped out and stored 60,000 barrels of crude in Lokichar ahead of transportation to Mombasa.

The trucks contract makes the Kenyan companies among the first winners of the country’s oil cash bonanza.

Kenya plans to move between 2,000 and 4,000 barrels of oil per day from northern Kenya to Mombasa port on road, in the absence of a pipeline, to be stored at the Mariakani refinery tanks.

This will allow 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 Sh210 billion pipeline by 2021 to cover 865-kilometres.

Mr Kamau said the first sea tankers will dock at the Mombasa port in June to pick up the consignment.

China and India have emerged as the main buyers of the Turkana crude oil. The Indian route offers the lowest freight cost for Kenyan crude at $2.50 per barrel (Sh257).

“Kenyan crude appeals to large and complex refineries with the ability to import high pour crude,” Energy ministry reports indicate, adding that refiners in India and South-East Asia are used to processing such high pour sweet crudes.

Kenya dropped its earlier target market in Europe, citing distance as an impediment and Suez Canal passage-way costs.

Kenya’s crude oil is classified as light and sweet, meaning it has less sulphur (below 0.5 per cent) — an impurity that has to be removed before crude is refined into petroleum.

This type of oil fetches higher prices in the global market because dealers find it easier to refine and it produces high-value products — petrol and diesel.

It is, however, waxy and sticky, making it necessary to heat it during transportation.

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.

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