The oil will be transported by road from Lokichar in Turkana County to Mombasa, where it will be exported.
Tullow Oil on Thursday confirmed that it will start exporting oil in June 2017 following President Uhuru Kenyatta’s directive to expedite drilling.
Briefing Mr Kenyatta at State House in Nairobi, Tullow Oil Chief Operating Officer Paul McDade said his company has made good progress on the Early Oil Pilot Scheme and will be ready to start oil exportation in June 2017.
The oil will be transported by road from Lokichar in Turkana County to Mombasa, where it will be exported.
He said initially 2,000 barrels will be produced per day, adding that Tullow Oil is committed to aggressive exploration that will see at least eight more wells drilled in the South Lokichar basin to scale up production.
“Tullow remains confident that the South Lokichar basin has the potential to see resources grow from the current 750 million barrels to around one billion of oil,” he said.
Energy Cabinet Secretary Charles Keter said the development of the Lokichar-to-Lamu crude oil pipeline is still on course.
Mr Keter said the government and its partners — Tullow Oil, African Oil and Maersk Companies — have concluded a joint agreement for developing the pipeline.
President Kenyatta emphasised the need to move with speed in the implementation of the pipeline project.
“We have started and we are not moving back. We want to be at the top of the pile. So we have set a path and Kenya is going to be a major oil producer and exporter,” President Kenyatta said.
The meeting was also attended by Energy Principal Secretary Andrew Kamau, Tullow Oil Vice-President East Africa Gary Thompson, Tullow Kenya Chairman Ike Duker and Country Manager Martin Mbogo.
-Are we exporting crude or processed oil?
-Is the refinery at changamwe functional?
Finally, one billion barrels oil is 4 trillion kenya shilling worth… Deduct say 40% expenses for exploration, manpower etc…and we get maybe 1-2 trillions…
What’s the cost of building the pipline and refurbishing the changamwe refinery again?
The 2000 barrels a day has been made necessary because Tullow storage tanks are full from the exploration drills. If they were to continue exploration drills then the oil has to be moved for either storage at Changamwe oil refinery or sold. I’m glad Tullow/Africa Oil/Maesk are continuing with the exploration drills, eight more drills and considering there 70% success rate is good new indeed. Meanwhile we await the results of their two big finds at Marakwet to know the reserves numbers there. I’m glad the oil pipeline is a done deal. $2.1 billion is not hard even for government but let Tullow/Africa Oil/Maesk bid for it with others and await the results. Our oil extraction cost will be among the cheapest in the world and therefore very viable. My take would be that the 2000 barrels isn’t much for government but it will completely fund the Lokichar-Eldoret highway so its therefore worth it. I wish they sell it to KQ. It will be 60% cheaper and will completely make a big difference to them.
I billion barrels in 2C (something i learned here), recoverable and another similar amount in reserve but will be hard to recover. However Tullow is still studying the 2 successful wells at Marakwet and it will undergo third party verification before announcing the results. However its looking good as it was way bigger than ngamia.
Changamwe refinery was closed as its machinery is outdated, It will need upgrading first and here lies the problem. Who will fund the upgrade.
instead of transporting the black gold to Changamwe, I think the govt should invest in Lamu instead and build the envisioned oil refinery right now in Lamu in readiness to export the oil. Coupled with the 3 berths being constructed, this will kick-start the LAPSSET project in a big way.
Everything about oil infrastructure is strategic. The refinery will be built in Isiolo right in the middle in the country. Turkana oil will be pumped there and refined. If other oil is find in other blocks in North Kenya the same will apply. From Isiolo some of the refined oil will be pumped to Nairobi for national distribution, save us a huge import bill that is 14% of the imports and allows us to get very cheap oil to spur our economy. Some of the oil can be exported to Ethiopia through the proposed oil pipeline from Isiolo-Moyale-Addis that we had signed an MOU and feasibility study is underway. Lastly most of the refined oil will be pumped to Lamu port for export to earns us oil revenue. Finally the oil refinery will provide many by products our industries need at a cheap cost like bitumen, plastics, heavy fuel for power plants and gas. They will all be way cheaper and will make the economy grow faster.
Meanwhile this is just a baby step, right now lets await the Petroleum Bill 2016 to pass in senate and government can now await final reserve numbers of the explored blocks. The wheels of protracted negotiations can begin backed by various new laws. It may take us another 2 years before the winning bidders are announced and another 3 years to build the infrastructure.
Those Tullow mzungus will tell Uhuru what Uhuru wants to hear. They know Uhuru lacks attention to details and cannot ask probing question. It is even worse that Charles Keter is the one advising Uhuru on energy matters.
Unless we find oil in the Nyanza block that Tullow is due to explore then the days of Changamwe refining oil is done. However one door closes and another is opened. It can be upgraded to a strategic oil reserve plant where more storage tanks are built to enable us have millions in storage to last for months and cushion us in the future.
We will not depend primarily on oil for exports, this will just be a bonus addition to our already diverse range of exports. If this oil production is realized, it will contribute a very small fraction of our GDP in the first decade.