Kenya seeks Sh500bn to build pipeline, oil storage facilities

Inadequate infrastructure has been blamed for slow pace in commercialisation of crude oil as the country seeks $5 billion (Sh500billion) to develop and expand fuel facilities.

Mining and Petroleum Cabinet Secretary John Munyes revealed that the country is seeking funds to finance its infrastructural development from Lokichar to coastal region through public-private partnership.

“We tested market for our oil, and the oil is good. But Kenya suffers from one problem; our up-stream and mid-stream is weak in such a way that we cannot commercialise our crude oil with our current (infrastructure) capacity,” said the CS.

He said it will cost Kenya Sh500 billion to finance the construction of the pipeline, central processing, storage facilities and upgrade the refinery facilities in Lamu and Mombasa. Currently, Kenya transports crude oil by road using trucks from Turkana to coast.

“We could upgrade the Mombasa refinery that is currently being used to store our crude oil and others will come up. We are also looking at having a model oil refinery at Lokichar,” Mr Munyes told Shipping and Logistics on Monday.

In March 2012, Kenya first announced that it discovered oil in Turkana in Block 10BB and 13T, raising hopes that the discovery had the potential to generate much needed petro-dollars to fuel economic growth. But the country is yet to fully commercialise the crude oil.

Mr Munyes said the Cabinet recently gave a nod through a memo to the government to engage a number of private investors to build capacity to commercialise the crude oil, noting that the multi-billion project is expected to start next year.

He disclosed that a number of companies had shown interest in the mega project to improve the infrastructure network as Kenya seeks to become a powerhouse in the oil in the region.

At the same time, the CS noted that oil exploration is ongoing in the Northern Kenya and offshore in the coastal region.