Tullow Oil to Contract Truck Companies to Transport Oil from Kenyan Fields to Port Mombasa

Tullow Oil Plc’s Kenyan unit said it’s seeking trucking companies to transport crude from northwestern fields to the port city of Mombasa as the East African nation rushes to export its first oil by mid-2017.

The work will involve the trucking of crude in insulated containers from a production facility near Lokichar, Turkana county, to storage facilities run by Kenya Petroleum Refineries Ltd., Tullow Kenya BV said Friday in an advertisement in the Nairobi-based Daily Nation newspaper. It said it plans to lease 100 ISO T11 standard insulated containers with a minimum fluid capacity of 25,000 liters.

“It’s a pilot scheme ahead of full field development to help the government of Kenya and the Kenya joint-venture partners better understand the technical and logistical requirements of oil production,” Tullow spokesman George Cazenove said in an e-mailed response to questions. The company has discovered a waxy crude that can harden if not heated, so “exactly what temperature the oil needs to be transported at will form an important part” of the pilot project, he said.

 Kenya, which has about 750 million barrels of recoverable reserves, plans to construct a 865-kilometer (538-mile) pipeline linking the northern fields to a port being built on its Indian Ocean coastline by 2021. In the meantime, the government says initial production of about 2,000 barrels per day, expected by June next year, will be hauled by road and rail.

Lokichar Basin

Vancouver-based Africa Oil Corp. estimates the South Lokichar basin, about 510 kilometers northwest of the capital, Nairobi, may contain as much as 1.63 billion barrels of oil.

Kenya’s government has previously said the northern oil would be transported by road from Lokichar to Eldoret, a thoroughfare it’s upgrading for about 3.2 billion shillings ($31.6 million), then taken to Mombasa by rail.

While Kenya has about 60,000 barrels ready for export, it needs oil prices at $40-$50 per barrel to avoid making losses as the cost of road-shipping is estimated at $30-$34 a barrel, according to Andrew Kamau, the principal secretary for petroleum. Renaissance Capital’s chief economist, Charles Robertson, has said Kenya’s oil may not be economically viable even at $50.

 Kenya is planning its own, shorter pipeline after Uganda abandoned an initial proposal for a joint line linking its oil-rich western Hoima region to Lamu port in Kenya. That conduit’s cost is estimated at $5 billion by Nagoya, Japan-based Toyota Tsusho Corp. Uganda prefers a $4 billion pipeline across Tanzania to that country’s Tanga port.
Source: Bloomberg

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