Budget crunch hits early crude oil export from Turkana

Kenya’s quest to convert its Turkana oil into cash through the early oil pilot scheme has suffered a major setback after the Treasury slashed the budget by Sh141 million for the project.

Andrew Kamau, the Principal Secretary for Petroleum said early oil pilot scheme where the government intends to move 2,000 barrels a day from Lokichar to the port of Mombasa will be hampered because of the budget cuts that was effected through the supplementary budget II.

“The budget for the early oil pilot scheme has been cut from the original Sh170 million to Sh29 million. This means that some activities for early oil will not take place,” Mr Kamau told the Energy committee when he appeared before MPs to defend the ministry’s budgetary allocation.

“We can’t procure without a budget. We may have to delay some activities that we wanted to do under the early oil project,” Mr Kamau told the committee that was chaired by Dr Robert Pukose.

READ: KPC invites tenders for early crude oil export works

Kenya plans early crude exports of up to 2,000 barrels per day to be transported to Mombasa by road and loaded on tankers for shipment.

The early oil exports would be followed by commercial production and exports after the Mombasa-Lamu Lokichar crude oil pipeline is completed in 2021.

Petroleum secretary John Munyes recently announced that the pilot scheme would commence end of May, after suffering delays since last July.

“We have hired an audit firm to query Tullow’s cost recovery of its Turkana oil fields. We are alive to issues of businesses people. We know the games that are there in any business,” Mr Kamau said.