Kenya selects Wood Group Plc to design $2 billion oil pipeline

Kenya has selected multinational energy services company Wood Group Plc to design an oil pipeline to pump crude from fields in the northern part of country to a port on the Indian Ocean.

The oil pipeline is estimated to cost $2 billion and would take a maximum of 8 months to design, noted Andrew Kamau, the principal secretary at the Petroleum and Mining Ministry.

In 2012, Kenya discovered commercial oil reserves in its Lokichar basin- a basin in the remote part of the country, about 850 km (528 miles) from the most likely port of export, in Lamu. By January 2018, the government invited companies to design engineering bids for the pipeline.

There has been a prolonged deliberation of oil exports since 2012 when UK-based Tullow Oil, in partnership with Africa Oil, a Canadian oil and gas company, made discoveries in two separate blocks of the Lokichar Basin in the sparsely populated northern interior—24 percent more than earlier estimates in 2016.  Currently, oil reserves in Africa stand at a total of 766 million barrels, according to results of an independent survey.

With Tullow’s 2016 annual report where it announced reserves of 750m barrels, up from an earlier estimate of 600m, it was speculated that the basin’s potential reserves could top $1 billion and that oil pipelines were large enough for commercial exploitation.

The $2 billion pipeline to be designed by Wood Group Plc is expected to be built before production is due to start in 2021/22.

Tullow Oil operates the Kenyan fields, while the other investors are Canada’s Africa Oil and France’s Total. Kenya is expected to take a stake through state-owned National Oil.