Kenya’s rush to start exporting crude oil in the middle of an election year could cost the country more than Sh4 billion loss, a civil society group said yesterday.
The Kenya Civil Society Platform on Oil and Gas described the plan as questionable given the costs involved and the prevailing global crude prices.
The lobby group, in a report made public yesterday, said exporting oil by road over such a vast distance covering more than 800 kilometres would only culminate in massive loss of revenue that could be saved by developing the relevant infrastructure such as a pipeline and a mini-refinery.
Part of the loss will come in the form of heavy investment needed to develop the infrastructure to transport and store the waxy crude for shipment overseas.
President Uhuru Kenyatta’s Jubilee government, which has been pushing for early export of crude, has in recent weeks appeared to prepare the Kenyan public for that loss with an announcement that the Early Oil Production Scheme is not a money making venture and should therefore not be expected to produce any revenues.
Yesterday, Petroleum principal secretary Andrew Kamau disputed the report’s finding that Kenya stands to lose revenues in the oil experiment, insisting that there should be no revenue expectations in the initial plan.
“This is not a money making operation, we are simply proving our capacity to export crude oil and preparing the market for full production,” the PS said, adding that Uganda has had 30,000 barrels of crude stored in Hoima for six years, a reality he described as lacking merit.
“We hope to know and address any challenges within the two years and thereafter have a smother sail when we begin full production,” Mr Kamau said.
Tullow Oil described the civil society group’s report as thorough even as it supported Mr Kamau’s stand that the early oil production scheme is not viable.
“The early oil production scheme is not viable unless the project is heading towards full field development, including the development of a heated pipeline,” adding that it is a pilot scheme designed to assist the government and the oil companies on the way to Full Field Development.
“It will give us further technical data about the oil reservoir we are working with; establish commercial arrangements and infrastructure that will facilitate the implementation of the Field Full Development; create small-scale employment and business opportunities locally and allow us to establish Kenyan crude oil in international markets,” said Tullow.
The civil society report uses the total volume of crude expected to be produced under the plan and the costs involved in its transportation to the port of Mombasa to measure its viability.
Credit: Business Daily