Kenya is now set to export crude oil, but it might be late to the ‘petro-party’

While there is a global move to wean off crude oil importation and exportation and most countries are diverting their resources into producing and harnessing more dependable sources of energy—preferably renewable—Kenya is celebrating a feat that only one East African nation has been able to achieve: being an exporter of crude oil.

This is a dream the East African nation has had for so long, which led it into oil mining and exploration. Kenya’s ambition to become one of the global oil producers was closer to fulfillment on Sunday, six years after oil was discovered by British firm Tullow Oil. It had spent over $1 billion (Sh101 billion) in exploration activities.

In 2013, Kenya closed its obsolete refinery 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.

Since discovery, the viability of exportation has been in question. But perhaps this is now being answered by President Uhuru Kenyatta flagging off transportation of its first oil barrels, which were unveiled in four trucks that ferried crude oil from oil drilling site Ngamia 8 in Lokichar, Turkana County, to Mombasa as part of the Early Oil Pilot Scheme.

Previously Uganda was the only oil-producing nation in East Africa. However, the unveiling of the Early Oil Pilot Scheme, which will be followed by a Full Field Development phase, will enable Kenya to become an exporter and provide information for future exploration and development.

With the growing trends and increase in technology, there has been predictions that the end is nigh for crude oil thanks to the rise of natural gas and more advanced fuel economies. As Kenya through Tullow oil targets a daily crude oil production of 2,000 barrels in Turkana County and with each truck carrying 156 barrels, the government hopes that exporting oil will earn the country the much-needed petrodollars required to clear its public debt.

About 70 percent of all domestically produced petroleum products are transported by pipeline. Although pipeline is generally used to transport oil and gas long distances, truck transportation is commonly used to move smaller quantities of oil and gas over shorter distances. Even though trucks have limited holding capacity, an average truck is capable of holding 200 barrels of oil. Transporting oil and gas by pipeline is generally cheaper than transporting it by rail or truck. On average, it costs about $5 per barrel to transport oil and gas by pipeline compared to $20 a barrel by truck.

Asides a shift from crude oil in the near future, the sustainability of shipping crude in trucks via roads rather than through pipeline is a thing to question as trucking oil is expensive and unsustainable given that wavering price of oil at about $50 a barrel. Although Kenya, in April, assigned 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, a pipeline estimated to cost $2 billion and would take a maximum of 8 months to design. Until this and other factors are considered, Kenya should not celebrate.