Tuesday, October 29, 2019 - Kenya is set to ship out a second batch of 500,000 barrels of crude oil fromTurkana at the end of February 2020 before Tullow Oil makes its Final Investment Decision (FID)
In August, Kenya exported 240,000 barrels of crude oil under the Early Oil Pilot Scheme (EOPS) which fetched $12 million (Sh1.2 billion)
The first shipment was valued at a near Brent Crude premium of Ksh.6198 ($6o) placing the country’s oil prospects at top-end market valuation.
Due to its low sulphur content, the Kenyan oil has been described as sweet and light making it attractive to investors.
This, coupled with the recent changes to the International Maritime Organization (IMO) regulations that require the marine sector to reduce emissions by over 80 percent through switching to lower sulphur fuels, could see Kenya strike a jackpot.
The only negative attribute so far is that the oil is waxy and requires heating at room temperature.
The Government has decided to increase the volumes of exported crude oil with the aim of benefiting from the economies of scale according to Brian Muriuki, an advisor to the State Department of Petroleum.
“We would anticipate better pricing from a larger load.”
“With a larger vessel, we would expect to get closer to Brent parity in terms of pricing,” said Muriuki.
Just like the first sale, prospective investors are expected to battle out for the batch through the re-opening of the procurement window which saw Chinese ChemChina UK Limited secure the first consignment.
So far Tullow has sunk an estimated Ksh.227.3 billion ($2.2 billion) to the project and it is set to raise new equity by partnering with Total, Africa Oil and the Government of Kenya.
The four entities will seek financing from the international debt market to the tune of Ksh.216.9 billion ($2.1 billion) with a large portion of funds going into the laying of the proposed 824 kilometer heated pipeline to the port of Lamu.
Kenya is targeting more than Sh150 billion in annual revenues from Turkana oil in the initial years of commercial production, which starts in 2022.
This would see the sector emerge as one of the largest foreign exchange earners for Kenya, alongside tourism and remittances from Kenyans abroad.
The Kenyan DAILY POST