Kenya sells its first barrels of oil to UK-based Chinese firm

Friday, August 16th, 2019 00:00 |
Oil transport. Photo/File

Noel Wandera

ChemChina UK Ltd has been selected as the buyer of Kenya’s first crude oil export.

A joint statement from the Kenyan government and Tullow Oil plc (Tullow), together with its joint venture (JV) partners - Total and Africa Oil Corporation - said the firm was selected following a competitive tender process.

“An invitation to bid was issued to prospective buyers on July 26 this year, and to which there was strong response with eight bids received from international firms representing European and Asian refineries,” said the statement.

Trading platform

ChemChina (UK) Ltd, a wholly-owned subsidiary of ChemChina Petrochemical Co Ltd, serves as a London-based trading platform to complement its sister company ChemChina (Singapore) Pte Ltd build around-the-clock trading networks covering various fields.

Engaged in crude oil trading, storage, crude oil and fuel oil shipping, and crude oil procurement for ChemChina’s refinery companies, ChemChina (UK) Ltd has its businesses running in North America, South America, West Africa and the Mediterranean, developing collaboration with petroleum companies of the oil-producing countries, international energy giants and oil products companies across the world.

Early this month, President Uhuru Kenyatta, while chairing the Cabinet, said crude oil had been sold in a deal that would earn the country Sh1.2 billion. 

The transaction was concluded with 200,000 barrels at a price of $12 million (Sh1.2 billion).

The crude oil is currently being stored at the partially rehabilitated Kenya Petroleum Refineries Ltd in Changamwe, Mombasa. The consignment has been delivered by trucks since July last year under the Early Oil Project Scheme.

First oil

The news is also expected to create excitement in the Lokichar oil fields where Tullow Oil and its joint partners continue to explore more blocks for oil.

Kenya discovered its first oil deposits in 2012 and since then, explorations have continued in the Lake Turkana Basin with more deposits being reported.

In previous reports, Tullow Oil estimated some 560 million barrels in probable reserves.

Tullow further indicated that this would translate to 60,000 to 100,000 barrels per day of gross production, which is said to be insufficient to warrant the construction of a refinery locally, hence the export plans.

The export is intended to test the international markets’ reception of Kenya’s low-sulphur oil ahead of commercial production, which is estimated to start in the second half of 2023.

Tullow Oil and its partner Africa Oil discovered commercial reserves in the Lokichar basin in 2012. The firms are working towards finalising a deal for construction of a pipeline from the Turkana fields.

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