Kenya to begin commercial oil Exportation

Kenya would soon begin commercial oil export activities, as multinational oil and gas exploration company, Tullow Oil plans to begin exportation on commercial scale in 2023.

“After over six years of hard work, we can now move forward to commercializing these low cost resources through a phased development of the basin involving a central processing facility and an export pipeline to the Kenyan coast,” Tullow’s Executive Vice President for East Africa, Mark MacFarlane announced on Wednesday.

In 2016, Tullow Oil chief operating officer Paul McDade told the Kenyan President Uhuru Kenyatta that the company will start with the production of 2,000 barrels of crude oil per day in Turkana County, and stocks would be ready for export through the Early Oil Pilot Scheme (EOPS) in June 2017. However, exportation of oil was delayed till 2018.

“In 2018, we will focus on taking the project towards Final Investment Decision (FID) in 2019 with a prudent and flexible plan of execution that can take advantage of low oil services costs and deliver first oil and cash flow as soon as possible. With good progress being made in Uganda towards FID, East Africa is on the verge of becoming a major oil exporting region,” Mac Farlane noted.

A Pilot project to be carried out by the East Africa focused Oil and Gas Company on behalf of the Kenya government is scheduled to commence early 2018.

“Extended well tests, water injection tests, well interference tests and water-flood trials have proved helpful for planning the development of the oil fields” the company noted, adding that “the exploration and appraisal campaign in Kenya has confirmed the presence of substantial oil resources in the South Lokichar Basin”.

Kenya closed its obsolete refinery in 2013, putting the country on the sole path of exporting crude, despite the continuous importation of refined products. Crude oil prices remained volatile in the face of an oversupply, plunging to $30 a barrel at some point in 2016, compared to over $100 in 2014.

With the government’s hope that exporting oil will earn the country the much-needed petrodollars it needs to clear its public debt, Kenya oil industry is currently controlled by importation and refining.

The East African country is nowhere near Saudi Arabia –world’s oil top producer which pumps out over 10 million barrels a day– , with the expected peak of 80,000 barrels per day.

British company Tullow that struck Kenya’s first oil in the northwest region of in Lokichar in 2012, reported an operating profit of $22 million for 2017 ended December 31, compared with a loss of $755 million in 2016.

With a 32 percent increase, Tullow’s working interest production was higher at an average of 94,700 barrels of oil equivalent per day in 2017, with projection for 2018 production ranging from 86,000 to 95,000 barrels of oil equivalent per day.