State to up­grade crude oil re­fin­ery for ex­ports

The state will spend Sh 1.5bn to re­fur­bish the petroleum re­fin­ery in Mom­basa, which has been dor­mant since Septem­ber 2013

The Star (Kenya) - - News - CON­STANT MUNDA @munda­con­stant

The gov­ern­ment plans to spend up to Sh1.5 bil­lion to mod­ify the dor­mant petroleum re­fin­ery in Mom­basa to han­dle waxy crude oil from Lo­kichar Basin for ex­port from next June.

Petroleum Prin­ci­pal Sec­re­tary An­drew Ka­mau on Fri­day said the cash will be used to in­stall heat­ing equip­ment and other fa­cil­i­ties at the Kenya Petroleum Re­finer­ies, which has been idle since Septem­ber 2013.

This was af­ter In­dia’s Es­sar En­ergy fell out with its equal part­ner – the gov­ern­ment – on the strat­egy to re­fur­bish the re­fin­ery.

“We need to do some work there and that work has be­gan. We are look­ing at spend­ing be­tween Sh1.1 bil­lion and Sh1.5 bil­lion,” Ka­mau said at a press brief­ing in Nairobi. “There’s a clean­ing pro­gramme set to be­gin in De­cem­ber, and we will need to im­port equip­ment as well to en­able us to sep­a­rate wa­ter and dust from crude oil.”

The re­cov­er­able oil re­serves are es­ti­mated at 750 mil­lion bar­rels in blocks 13T and 10B. The blocks are owned by Tul­low Oil of Bri­tain ( 50 per cent), while Cana­dian ex­plorer Africa Oil and busi­ness con­glom­er­ate Maersk of Den­mark hold a 25 per cent stake each.

The crude will be trans­ported by road af­ter the plan for rail­way con­nec­tion from El­doret was aban­doned. This fol­lowed the down­grad­ing of vol­umes to be pro­duced to be­tween 2,000 and 4,000 bar­rels daily from the ini­tial es­ti­mates of 5,000 to 10,000.

“At 2,000 bar­rels, we are talk­ing about 14 trucks ev­ery sin­gle day,” Ka­mau said. “If you go the rail route, they will need to have a train ev­ery two days and there’s no in­fra­struc­ture at the re­fin­ery to re­ceive crude oil by train.”

The oil com­pa­nies are han­dling the ten­der­ing for the truck trans­porta- tion sys­tem at a cost which Tul­low Oil coun­try man­ager Martin Mugo said will be mar­ket-de­ter­mined.

“We will leave it to firms to de­ter­mine in the ten­der whose ex­pres­sion of in­ter­est doc­u­ments should be ready in 14 days,” Mbogo said.

The Cabi­net, on Au­gust 11, ap­proved Sh3.2 bil­lion bud­get for up­grade of El­doret-Lo­kichar Road to han­dle 2,000 to 4,000 bar­rels of crude.

The par­ties have agreed on a breakeven price of be­tween $50 (Sh5,062 ) and $55 (Sh5,568 ) per bar­rel( 49 litres) when ship­ment be­gins next June – the same time they hope to start Full-Field pro­duc­tion.

This will be pre­ceded by Early Oil Pi­lot Scheme – which in­cludes trial trans­porta­tion of crude to Mom­basa – which has been pushed back to March next year from the ear­lier tar­get of Au­gust.

Brent crude oil was on Fri­day trad­ing at about $52.39 a bar­rel, dur­ing the week.

/ ENOS TECHE

Petroleum PS An­drew Ka­mau with Tul­low Oil coun­try man­ager Martin Mbogo at a brief­ing in Nairobi on Fri­day

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