Kenya set to embark on early Oil Pilot Scheme

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By Judith Akolo

Kenya is set to embark on the Early Oil Pilot Scheme (EOPS) that will see crude oil from Lokichar transported by road to Eldoret and then by rail to Mombasa.

Analysts in the energy sector have already indicated that Kenya’s crude grade ranks among the best in the world and have indicated that Kenya’s crude could be priced higher than oil produced by traditional oil producing countries.

Preliminary tests carried out by engineers from the Ministry of Energy and Petroleum and the companies that have been exploring oil in Turkana led by Tullow Oil show that Kenya’s crude oil is low sulphur content and density, which means it is sweet and light.

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Kenya could also cut its niche in oil exploration as the country’s oil is classified as sweet light oil. The oil from the Lokichar Basin is said to compare favorably with the best crude oil in the world.

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Tullow and Africa Oil have in their disclosures to investors said the Kenyan crude is of high quality.

Tullow has already produced 60,000 barrels of oil that is currently held in storage tanks at Lokichar.

These will be among the first barrels that will be trucked to Mombasa under the early oil production programme.

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The Government has set a 43 US dollars price, which is about Ksh 4,300 per barrel as a breakeven price for its pilot programme that is set to commence June.

In the 2017/2018 budget, the government has 2 billion shillings for Liquid Petroleum Gas, LPG exploration and distribution and 3.84 billion shillings for exploration and distribution of oil and gas.

Key initiatives to be undertaken in the new financial year include the delivery of 480,000 barrels of crude oil to the Mombasa refinery terminal for export under the Early Oil Pilot Scheme (EOPS).

EOPS is expected to provide experiential learning to assist in full field development planning, and to test the market before a 2.1 billion US dollars pipeline of about 855 kilometers is constructed.

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Early Oil Pilot Scheme – EOPS will see Turkana Crude transported via road using heated 20-feet containers.

It is estimated that the round trip will take three days with 30 trucks being loaded daily.

While analysts say this lengthy and complicated procedure, estimated to go on for three years, will draw heavy expenditure at probably no profit, the Ministry of Energy and Petroleum says the logistics in place will bring both short-term for long-term gains.

 

 

 

 

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