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Economy

Kenya to export 2,000 barrels of crude by road

Energy Cabinet secretary Charles Keter. PHOTO | FILE
Energy Cabinet secretary Charles Keter. PHOTO | FILE 

Kenya will next year start exporting 2,000 barrels of crude oil per day by rail and road as it expects to complete its own pipeline in five years at cost of $4.2 billion (Sh425 billion).

Energy Cabinet secretary Charles Keter told a parliamentary committee that the proposed pipeline from Lokichar-Isiolo-Lamu will be ready in the second quarter of 2021.

Mr Keter said that Kenya is proceeding with plans to start small-scale production by next year, and that roads connecting the oilfields in Turkana to Eldoret were being improved, along with a railway from Eldoret to the port city of Mombasa.

Kenya’s own pipeline plan comes after Uganda opted to build a pipe for its oil through Tanzania.

Land-locked Uganda said last year it would build a pipeline through Kenya, linking its fields to Kenyan discoveries in Lokichar and on to Lamu.

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Africa Oil and partner Tullow Oil first struck oil in Lokichar in northwest Kenya in 2012. The recoverable reserves total an estimated 600 million barrels.

“Tullow will be able to produce about 2,000 barrels per day. But they are not going to go into full-scale production for commercialisation,” Mr Keter said.

The 2,000 barrels per day will translate to Sh8.3 million ($82, 000) daily based on World Bank crude forecasts $41 a barrel.  This will translate to Sh3 billion annually, assuming the plants will run daily.

Mr Keter said the decision by Uganda to go the Tanzania route was informed by Kenya’s failure to develop the Lamu Port under the South Sudan, Ethiopia Transport (Lapsset) corridor.

“I cannot deny that we delayed in doing the Lamu port which should have been done a long time ago. Lapsset had died until December when President Uhuru Kenyatta went there and saw the need to revive it,” Mr Keter said.

“We now have Sh5 billion allocated in the mini-budget to revive it. If we had done the Lamu port and the road network, may be it would have helped Uganda to make the decision to transport its crude oil through Kenya,” he added.

Mr Keter regretted that Kenya was locked out of make or break talks between Tanzania and Uganda energy ministries, meaning that Kenya was not able to make its cases. “Going forward, our early pilot scheme includes the ongoing road-rail and pipeline-rail,” he said.

Mr Keter said the planned transportation of oil from Lokichar to Mombasa by road was arrived at after Uganda ditched Kenya’s route and questioned the port development, constructability, construction schedule, land acquisition, and financing.

The Energy ministry has offered Rift Valley Railways (RVR) the contract to move the oil over a distance of more than 800km from Eldoret to the Kipevu-based Kenya Petroleum Refineries  (KPR) from as early as February next year.

The upgrade of the 213km- road from Lokichar to Kitale has been top of the government’s agenda.

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