The early oil pilot scheme that was slated to begin in June last year is set to commence in coming weeks after Tullow Oil has confirmed that it plans to start transportation of crude oil from Turkana County to Mombasa by road in the current quarter.
Commercial crude oil production in Kenya is expected to strt either in the year 2021 or 2022 subject to a positive baseline Environmental and Social Impact Assessments that will be carried out by June this year.
Tullow Oil says it has so far spent 180 billion shillings in its Kenyan operations and expects to spend 110 billion shillings on constructing a heated crude oil pipeline between Lokichar and Lamu.
The government had initially planned to commence transportation of crude oil from Lokichar to Mombasa by road under the Early Oil Pilot Scheme in June last year but it was called off owing to logistical challenges.
This was postponed to October last year owing to delays in enacting a law that spells out how proceeds from the crude oil is to be shared among the exploration firms, national government, county government and the local community.
The plan entails transportation of the crude oil produced in Lokichar by to Mombasa and storing it at the Kenya Petroleum Refineries Limited to accumulate adequate stocks to be shipped out.
But for now Tullow Oil says the crude oil will be stored in Lokichar until all the necessary consents and approvals are granted and work is completed for the transfer of crude oil to Mombasa by road.
In a statement, Tullow Oil says: “Initial injectivity testing has started at Ngamia-11 and oil production and water injection facilities are being constructed in the field ready to commence production/injection in the first quarter of 2018.”
Kenyans will have to wait until the year 2021 or 2022 for Tullow Oil to commence commercial crude oil exports, which will be subject to a positive baseline Environmental and Social Impact Assessments that will be carried out in the second quarter of this year.
Kenya has been scouting for partners to invest in the heated crude oil pipeline between oil wells in Turkana County and Lamu.
Tullow Oil had expressed interest in the 215.9 billion shillings pipeline and now says “The South Lokichar basin appraisal programme has confirmed material oil resources to support substantial oil production and an export pipeline to the Kenyan coast pending a Final Investment Decision is planned for 2019.”
Tullow Oil projects that if it constructs the heated pipeline, its costs in Kenya would be 290 billion shillings comprising 180 billion shillings spent on crude oil exploration and development as well as 110 billion shillings on the crude oil pipeline.
The firm which has so far drilled 21 appraisal wells in the South Lokichar basin estimates that the basin has about 4 billion barrels of crude oil.