Kenyan Pipeline Project May be One Step Closer to Reality
(P&GJ) — The Kenyan Government along with partner Tullow Oil has signed a crude oil export deal with ChemChina UK, creating more incentive to construct a proposed $1 billion pipeline.
Earlier this year, the government confirmed its commitment to build a 510-mile (821-kilometer) pipeline from a processing facility in northern Kenya to an export facility on the coast near Lamu. The pipeline is expected to have a capacity of 80,000 bpd.
Almost as soon as the project was announced, it began to face delays from within the Kenyan government. A final investment decision (FID) was expected this year, but Tullow has said that permitting setbacks have pushed the FID to 2020.
This week, the Tullow-led group pioneering the project, which includes France’s Total and Africa Oil, announced a deal with ChemChina UK to purchase the first exports of the project, pending completion of the pipeline.
Although the initial purchase will be small-scale, Reuters today reported that larger commercial purchases will begin once the pipeline is finished. The project group is currently running a pilot scheme to test flow rates and address technical issues. The scheme is currently transporting about 2,000 bpd by truck to the port city of Mombasa.
Tullow estimates that Kenya's onshore fields in Turkana hold 560 million barrels of oil and expects them to produce up to 100,000 barrels per day from 2022.
President Uhuru Kenyatta said earlier this month that Kenya had secured a buyer for 200,000 barrels of crude oil worth $12 million, although he did not give further details.
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