Govt. signs oil export agreement with Tullow

The government has signed an oil exportation agreement with Tullow Oil and Africa Oil and Maersk International.

The signing paves way for the start of the early oil project that will see fuel transported from the Turkana oil fields by road from next month.

Already Tullow and its partners have stored has 70,000 barrels of crude oil in storage in Turkana which be used for part of the pilot program.

Energy Cabinet Secretary Charles Keter said the signing of the agreement paves the way for the start of tests on the viability of Kenya’s oil before going fully commercial in 2020.

“With this agreement, by the end of next month we should start the movement of product from Lokichar to Mombasa and eventually for export as we have been working on very tight deadlines,” Mr Keter said during the signing.

Kenya’s crude oil is considered waxy and requires constant heating to keep it in a fluid state.

According to Tullow, the high temperatures in Turkana County haven’t required the firm to employ a heating mechanism.

The firm has however called on transporters wishing to take part in the early oil pilot scheme (ESOP) to provide trucks with a heating mechanism.

Mr Keter said the early oil project would give both the government and the exploration partners, invaluable data as they head to market.

“It is good to ascertain the quality of our oil. You cannot know the product you have until it is tested in the market,” he said.

Construction of the road to the oil fields is still underway with the government pumping Sh3 billion.

Initial estimates show that a round trip from Turkana to Mombasa will take between 10 to 13 days with a minimum of 20 trucks on the road.

The Kenya Pipeline Company last week signed a lease agreement with the Kenya Petroleum Refineries Limited (KPRL) that will enable the government store crude oil before export.

Kenya has 750 million barrels of recoverable crude oil with more exploration activity still underway.

The Ministry of Energy has already indicated that Kenya is unlikely to make money from the early exports adding that the pilot scheme is being used to gauge the effectiveness of the export process.

Tullow Oil, Africa Oil and Maersk International are yet to make a final investment decision on the commercial viability of the country’s crude oil.