Kenya in preparation to see crude sales in 2016 as Uganda remains uncertain

oilmanSpeculative media reports coming from Kenya say the country is in preparation to pump its Oil deposits from Lokichar valley to the International market in early 2016.

According to Oil News Kenya,  the nation’s leadership has reached significant discussions on the issue with the latest being using road transport means as the nation awaits the commissioning of the Crude Oil Pipeline.

Meanwhile Uganda’s Oil sector has been stalled by a series of a yet to be implemented decisions and policies that would be key in reading the date of the first drop of oil.

Both Uganda and Kenya have a yet to be negotiated agreement on Crude export Pipeline project.

While attending to a question from one of the participants of an oil and gas dialogue held in Kampala in August, 2015, the Commissioner for Petroleum Exploration and Production Department in the Ministry of Energy and Minerals, Earnest Rubondo said the country still is not clear on the production date.

“The first production of oil is important, but between now and the time the first drop of oil is produced for sale, there is a lot of activity that are important and crucial in the lives of Ugandans” he said

One of the major issues that has staled the process of oil production in Uganda is the indecision by the country on the right Crude oil pipeline route.

In August 2015, the Presidents of Uganda and Kenya issued a joint communique saying they had “agreed on the use of the Northern Route i.e. Hoima-Lokichar-Lamu for the development of a crude oil pipeline” that would export most of Uganda’s and all of Kenya’s oil.

Yet only two months later the governments of Uganda and Tanzania agreed to study an alternative pipeline route to the Tanzanian port of Tanga.

This indecision could have prompted Kenya to seek an alternative as it moves to pursue to Oil production as a matter of urgency.

According to Oil News Kenya, the road transport to be used in the project require major upgrades on especially in the Northern rift valley town of Kitale and the South Lokichar fields which is in a dire state after decades of neglect.

The website in 2013 had suggested that the Kenyan government might take the road option due to the complexities of building a crude oil pipeline as well as the government’s zeal for early evacuation even terming it an emergency project.

These reports also confirm prediction by pundits that Kenya could export its oil before Uganda which discovered its crude six years prior.

Uganda Oil has also learnt that the uncertain oil market might have prompted International Oil Companies Including French’s Total EP, CNOOC and Tullow which are awaiting production licences in Uganda to hold the card as production would seem a such risky venture.

In October 2015, Tullow oil, the majority operator in Uganda said it intends to delay Final Investment Decisions in Uganda Oil field as it is not certain on the export alternative.

“You need a pipeline route firmed down and then you need to get FID. So FID probably in early 2017 and then three years later, you would have first oil,” Tullow’s Chief Executive. Aidan Heavey said at the Africa Oil Week conference in Capetown South Africa.

However, if pre-production legal and finance institutions are in place, Uganda could kick of production because the much needed legal regulatory framework for oil and gas is already in place although sector analysts project the production could come as late as 2020.

Credit: Oil News Kenya



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