Kenya falls short on refinery crude oil capacity

Trucks containing the first consignment of the crude oil is seen at Kenya Petroleum Refineries plant in Mombasa, on June 7, 2018. - Initial plans are for trucks to carry some 2,000 barrels of oil per day from wells near Lokichar in the far north, all the way to Mombasa, about 1,000 kilometres (620 miles) away. The crude oil will be stored at the plant awaiting exportation early next year. Kenya has begun its journey of being an oil exporter after President Uhuru Kenyatta flagged off the first batch of crude oil trucks in an experimental Early Oil Pilot program. (Photo by ANDREW KASUKU / AFP)

Following the Kenyan government’s 2017 announcement to list state-run National Oil Corporation of Kenya and raise $1 billion in a dual listing by early 2019, it has been found that Kenya’s crude oil deposits are insufficient to justify construction of a refinery.

Kenya, which currently exports no crude, discovered commercial oil reserves in its Lokichar basin in 2012. Oil exploration and production company, Tullow Oil, estimates the basin to contain an estimated 560 million barrels in 2C proven and probable oil reserves.

Tullow has said this would translate to 60,000 to 100,000 barrels per day of gross production. As a standard procedure, refineries are profitable only when there is a minimum refining capacity of 400,000 barrels a day, says Andrew Kamau, principal secretary at the petroleum and mining ministry.

“We only have 80,000 barrels a day, so where are we going to make money on that? We can import cheaper from India,” he adds.

Other partners in the blocks with crude oil discoveries are Africa Oil Corp and Total. Last week, Tullow indicated expected commercial framework agreements  from the government and deals over land acquisition for a 800-km pipeline and oilfield infrastructure in the first quarter.

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