Kenya President Uhuru Kenyatta has given a ‘State House team’ until the end of January to work out on the logistics of transporting the crude oil from the oil fields in the Turkana region to the sea-port according to latest Reports.
A source quoted by The East African newspaper, said the team has been asked to work on the report expeditiously a thing clearly demonstrating that the thinking in government circles is that Kenya has to start producing oil this year. The Source further noted Kenya Oil must be on market by September.
Tullow Oil Plc, jointly with Africa Oil Corporation have discovered 600 million barrels of oil, in northwest Kenya, which the government wants moved by road and loaded on rail wagons owned by Rift Valley Railways be transported to the Kenya Petroleum Refineries storage tanks in Mombasa.
“From there, the waxy crude will move by an existing pipeline that needs to be reconfigured so that it can pump directly to the jetty at the Kipevu Oil Terminal” The East African reported.
However, according to GlobalData Upstream Oil and gas analyst Jonathan Markham both Uganda and Kenya’s Oil sector can only thrive competitively in the murky oil market through a least cost Export plan which is a pipeline in this case.
“…without an economical export route, the inland discoveries will remain commercially unviable at current oil prices,” he noted.
“Development of an export pipeline would also be a driver for upstream exploration in the region. Some blocks have already been licensed by governments in central and eastern Africa, but the remote locations have dampened interest from major oil companies” he observed
If successful, the deal will be a big breakthrough for Kenya’s nascent oil production industry, with 2016 marking the country’s entry into the league of oil exporting nations The Daily Nation reported.
Experts in Kenya have noted that the earliest the Turkana oil fields can be commercially exploited is 2020 given the uncertainty of the market as the latest being oil trading at $35 pb.
Brent oil prices tumbled below $35 for the first time in 11.5 years on January 6,2016, plagued by abundant oversupply and the ongoing row between key producers Iran and Saudi Arabia dimming prospects for production cuts.
Some analysts, however, have expressed optimism that 2016 is a good year to begin production as the global oil prices are set to start recovering.
However, a London-based consulting firm Wood Mackenzie Limited said that the oil prices are unlikely to rise steadily this year.
“It is going to be a slog until the second half of 2016 with the oil market facing rising Iranian oil output and continued implied stock builds for the first half of 2016,” said Wood Mackenzie.
“Really, I wouldn’t like to be in the shoes of an oil exporter getting into 2016. It’s not exactly looking as if there is light at the end of the tunnel any time soon,” the Business Daily quoted global online trading and investment bank Saxo Bank senior manager Ole Hansen.
It is not clear how Kenya is expected to sail in the market so uncertain at it is at the present time.
Meanwhile the American Government expressed interest in funding construction of an oil pipeline linking northern Kenya oil fields to Lamu, US ambassador to Kenya revealed.
Mr Robert Godec, said his government would help secure funding to a tune of Sh1.4 billion towards the oil pipeline and power generation projects thereby fast-tracking the government’s pledge to export oil as well as provide locals with cheap electricity.
Credit: Daily Nation, The East African, GlobalData, Business Daily