Tullow Oil expects to sign an agreement with the government on construction of a pipeline to transport crude petroleum from Turkana to the Kenyan coast before end of year. The joint venture agreement (JVA) with Maersk and Africa Oil companies and Kenyan government will be followed by the pipeline’s technical requirements, financing, and investigation of environmental and social impact of the pipeline as well as ownership structure.
Construction of the 865km pipeline was decided on after Uganda dropped out of the agreement and instead signed an agreement with Tanzania for a separate pipeline due to issues of insecurity that could be associated with Kenya’s pipeline.
The firm continues to back the move to export 2,000 barrels of crude oil per day by road and says that the completed Early Oil Production Scheme (EOPS) will give them adequate information for commercial scale production. The Scheme intends to utilize five existing wells to produce oil with phase one targeting 2,000 barrels each day.
Further, Tullow through a public notice requested for experienced Kenyan registered companies for the provision of crude oil transportation by road and provision of insulated tank containers.
Recently, the government announced that the product will not be transported by rail as planned. Ministry of Energy made claims that Rift Valley Railways (RVR) failed to meet a key deadline in modifying its rail equipment for the transportation of the oil.
One of the prerequisites for moving oil through rail was the construction of a KES 304 million facility at the refinery in Changamwe. This would allow ease of unloading of petroleum cargo from the trains. The RVR was expected to provide the drawing and specifications for this rail siding. This resulted to the Rail being excluded from the beneficial deal to transport the first batch of the product.
In December, the UK-based oil company said that it will restart exploration and appraisal drilling at Kenya’s prolific South Lokichar field after a recent 3D survey showed additional upside potential of more than 1 billion barrels of recoverable oil and estimates recoverable resources of 750 million barrels of oil.
Tullow, which has its main assets in Ghana, also has exploration acreage in Mauritania, Namibia and Zambia. In Uganda, where it had 1.7-billion barrels of oil to develop, Tullow Oil was targeting an export pipeline capable of taking 200,000 to 230,000 barrels a day to Tanga port in Tanzania. The front-end engineering and design of the pipeline is scheduled for 2017 and a final investment decision is expected in 2018.