Kenya seeks funding to build pipeline, oil storage facilities

Kenya is seeking funds to build pipeline and oil storage facilities to fast-track the commercialization of its crude oil.

Mining and Petroleum Cabinet Secretary John Munyes revealed that the country is seeking US $5 billion funding to develop and expand fuel facilities from Lokichar basin in northwest Kenya to Coastal region through public-private partnership.

Lack of adequate infrastructure has been blamed for slow pace in commercialization of the crude oil as the country seeks to enhance infrastructural development.

The funds will be used to finance the construction of the pipeline, central processing, storage facilities and upgrading the refinery facilities in Lamu and Mombasa. Currently, Kenya transports crude oil by road using trucks from Turkana to Mombasa, a process that has been marred by challenges owing to logistical issues and late issuance of regulatory approvals for the production and trucking of the commodity by road.

CS Munyes acknowledges that Kenya’s up-stream and mid-stream is weak in a way that commercialization of the crude oil with the current infrastructure is not possible.

“We tested market for our oil, and the oil is good but Kenya suffers from inadequate infrastructural capacity,” he said.

In 2019, Kenya exported 200,000 barrels of crude oil to ChemChina, a Chinese company, at a cost of US $120 million.

According to Munyes, upgrading the Mombasa refinery that is currently being used for crude oil storage will set path for others to come up. He revealed that the construction of a model oil refinery at Lokichar is in the pipeline.

The government of Kenya is seeking to engage a number of private investors to build capacity to commercialize the crude oil, noting that the multi-billion project is expected to start next year.

The yet to be commercialized oil exports are from Blocks 13T and 10BB which hold an estimated 560 million barrels of recoverable oil deposits. The two oil blocks marked the first announcement of oil discovery in Kenya in March 2012.

Source: Pumps Africa