Historic moment for Kenya as first oil cargo leaves port

Monday, August 26th, 2019 00:00 |
Tusker Mattresses Group chief executive Dan Githua (second left) and Malindi OCPD Philip Wambugu (right) and Malindi businessmen join in cutting a ribbon to mark the opening of Tuskys Malindi branch. Githua said opening of the new branch is part of the firm’s commitment to deepen its market presence in strategic locations. Photo/PD/COURTESY

Kenya is set join the league of oil exporting countries today as President Uhuru Kenyatta flags off the inaugural shipment of the 200,000 barrels consignment at the Port of Mombasa.

This will be the first time the commodity worth Sh1.3 billion makes its way into the international market. 

The crude oil will be shipped by Chinese State-owned firm ChemChina which won the tender to buy the maiden Kenyan oil early this month.

It was transported by road from Lokichar in Turkana to Kenya Petroleum Refineries Ltd (KPRL) tanks  in Changamwe, Mombasa where it has been stored.

Inaugural shipment

A statement sent to newsrooms said Uhuru is expected to arrive at the port at  9 am accompanied by several Cabinet Secretaries to preside over the  inaugural shipment of crude oil.

“The export of crude oil will start with a shipment of 200,000 barrels marking Kenya’s entry into the league of oil exporting countries,” the Presidential Strategic Communications Unit (PSCU) statement read in part.

During the pilot period, Tullow Oil started by trucking 600 barrels by road then upscaled it to 2,000 for stockpiling at the KPRL  facility.

Tullow Oil  struck oil in Turkana’s Lokichar basin in northwest Kenya in 2012. A Chinese firm ChemChina would be the first beneficiary to buy the first cargo of the Kenyan crude, after outbidding seven other refineries from Europe and Asia offering to buy the first cargo.

Kenya has a total of 94 wells of oil that have been drilled, 63 exploration blocks that have been gazetted, 276 blocks licenced while 36 other blocks are open to investors.

The national government is putting up an 820km, 20-inch diameter, South Lokichar-Lamu crude oil pipeline that will connect Turkana to Lamu Port. It is expected to be ready by 2022.

First cargo

This would bring the total amount of oil exported through the small-scale experimental project to 1.4 million barrels. Going by the price of about $60 (Sh6,180) per barrel that the first cargo has fetched, the Kenya oil could bring in Sh8.4 billion ($84 million) over two years.

However,  the money is said to only be  enough to cover costs incurred by the government and Tullow in implementing Early Oil Pilot Scheme (EOPS). 

Midstream process

The scheme entails the transportation of stored crude oil drawn from the testing oil wells; and the production of 2,000 barrels of oil per day over a two-year period. Tullow Oil has stated that the scheme is meant to help test the reservoir behaviour and the midstream process to inform the South Lokichar Full Field Development.

Uhuru announced early this month that Kenya had joined the league of oil exporting countries of the world after it clinched a deal for the 200,000 barrels.

On June 3 last year, the President flagged off four trucks with 156 barrels of Crude Oil from Lokichar in Turkana to Mombasa for storage at Kenya Oil Refineries Ltd.

It was then announced that Kenya would only be able to ship the crude oil after hitting 200,000 barrels. It has taken a year for Tullow Oil to reach that target.

ChemChina UK’s initial purchases are expected to be small-scale, with full commercial shipments due to begin once the pipeline is constructed.

Tullow estimates that Kenya’s onshore fields in Turkana hold 560 million barrels of oil and expects them to produce up to 100,000 barrels per day from 2022.

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