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.