Good News for Nanok as Oil exports from Kenya to start by July

A Tullow Oil exploration rig in Turkana. FILE PHOTO | NMG

Kenya is set to ship out its first oil export in two months. The shipment will contain 200,000 barrels of crude oil extracted from the Turkana oil wells.

Government officials and Tullow Oil executives are currently on a tour of Australia and Asia in search of buyers for the commodity according to a report by the National Broadcaster KBC.

Kenya will pick the highest bidder for the oil sale with the minimum bid price set at $50 (~KSh5,000) per barrel. Therefore, the country expects to raise more than $10 million (KSh1 billion) from the initial sale.

A truck loaded with crude oil enroute to Mombasa from the oilfields in South Lokichar

The international price of crude oil has been fluctuating in the past one year and currently stands at roughly $60 (~KSh6,000) per barrel.

The Principal Secretary in charge of Petroleum Andrew Kamau said that his ministry had received an environment assessment license from the National Environment Management Authority which allows commercial exploration of oil. The country plans to start large scale production and exportation of oil in 2022.

The project was launched in June 2018, and was to deliver the maiden shipment of 400,000 barrels in February this year.

The British oil firm said the new date is informed by the fact that it has failed to hit a target of trucking 2,000 barrels of crude daily from the oilfields in South Lokichar in northwestern Kenya for storage at the refinery in Mombasa.

Only 60,000 barrels have been transported to the Kenya Petroleum Refinery Ltd depot in Changamwe, a development that continues to put the government’s ambitions to be the first country in East Africa to export crude on hold.

The failure to achieve the February 2019 target is a major setback for the controversial scheme, which the government contends is a necessary precursor to full development and commercialization of the crude oil business.

While Tullow reckons that it has made substantial progress in Kenya towards crude exportation which is crucial in ensuring it recoups its massive investments, in Uganda, the firm’s plans to sell its interest to joint venture partners Total E&P and China National Offshore Oil Company (CNOOC) have remained in limbo since 2017 over tax disputes with the Ugandan government.

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