Kenya’s oil pipeline dreams set for 2021

Kenya will start a search this week for companies to design a crude oil export pipeline costing some $2.1 billion and which should be completed by 2021, Energy and Petroleum Minister Charles Keter said on Friday.

Tullow Oil and partner Africa Oil first struck oil in Lokichar in northwest Kenya in 2012 and Keter said the pipeline between Lokichar and Lamu on Kenya’s coast would be 891 km long.

“In our estimation, if all goes well, the pipeline should (be ready) in the second quarter of 2021,” he said. “The capex, I mean the cost, which can either come down or up, is $2.1 billion,” Keter told reporters.

Uganda is also looking to build a pipeline to export its oil and originally favoured a route though Kenya. But last week, East African leaders said at a summit Uganda would build its pipeline through Tanzania rather than Kenya.

France’s Total, one of the oil firms developing Uganda’s fields, had raised security concerns about the Kenyan route. A Kenyan pipeline could at points run near Somalia, from where militants have launched attacks on Kenya.

Tullow Oil, with stakes in both countries, had backed the Kenyan route, saying it would be cheaper if oil from both pipelines followed the same route.

Picking a route for the pipelines is vital for the oil companies’ final investment decisions on developing Uganda’s and Kenya’s reserves, which are among a string of oil and gas finds on Africa’s east coast.

Tullow Oil said on Thursday the recoverable reserves from its activities in Kenya totalled an estimated 750 million barrels, up from 600 million barrels previously.

Africa Oil and Tullow were 50-50 partners in blocks 10 BB and 13T where the discoveries were made. Africa Oil has since sold a 25 percent stake in those blocks to A.P. Moller-Maersk.

Tullow said earlier this week that the earliest the projects in Kenya and Uganda could reach a final investment decision was at least 18 months after the settling of the pipeline route.[nL5N17U5VH]

Keter said that while the pipeline project had not yet reached financing stage, they had received inquiries from some institutions about it.

“There are companies who have visited us, financial institutions. Even last year, I think IFC (International Finance Corporation) had shown some interest, (as has) African Development Bank,” Keter said

“These are ready. But they were waiting for the decision on which route are we going to go.”

–

Credit: CNBC Africa