This will also see more wells drilled raising the oil reserves to about one million barrels ahead of commercial production take off within the next decade.
Kenya is set to start exporting crude oil in June next year, but warned earnings will be little.
The Final Investment Decision (FID) for the Early Oil Pilot Scheme (EOPS) nod was given Thursday after Energy Secretary Charles Keter and the oil company representatives briefed President Uhuru Kenyatta on the progress made at two exploration blocks in Turkana County.
The country will begin small exports of crude for a pilot project next summer but Andrew Kamau, principal secretary at the State Department of Petroleum, confirmed they are not expected to generate profits.
Kenya needs the oil price to be no lower than $50-55 a barrel to exploit its oil reserves profitably, a government official said on Friday. US oil futures were Friday trading at $50 a barrel.
The FID scheme will fund commercial exploitation of the existing wells in Turkana County for an initial 2,000 barrels of oil per day starting March 2017 from Lokichar to Lamu by road for storage pending export.
Mr Kamau reiterated earnings from the exports will not be significant to facilitate sharing of ‘oil wealth’ earnings saying Kenyans will have to wait longer as plans for full field development continue.
During the presidential meeting attended by Tullow Oil Chief Operating Officer Paul McDade, Timothy Thomas (Africa Oil) and Kevin Kennelley (Maersk Oil), Turkana County Deputy Governor Peter Ekai supported the new development saying oil export portends good tidings for Turkana people.
Full commercialisation
Yesterday, Enineer Kamau said the EOPS phase will take some time as other infrastructural development for the oil fields equipment, pipeline and marine refinery are set up ahead of full commercialisation.
This will also see more wells drilled raising the oil reserves to about one million barrels ahead of commercial production take off within the next decade.
Initial transportation will be done via the Turkana-Kitale-Eldoret-Nakuru-Nairobi-Mombasa highway where each barrel of oil will cost between Sh 5,000 to Sh5,500 per barrel from Lokichar to Lamu.
“We cannot start consuming our own oil yet since we need to construct a multibillion refinery and a pipeline to transport the crude oil heavy with wax from the oilfields to the refineries.For now our main task is to establish volumes available,” he said.
Engineer Kamau said so far Sh 150billion had since been invested in exploration and initial infrastructural development activities by the three oil companies.
Mr McDade said all activities were within the set timelines saying the planned commercialisation would be successful.
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