Kenya plans to flag off the second shipment of early oil exports
in February next year as the government continues to test the market
for its Turkana crude oil reserves.
The Ministry of
Petroleum said global refining plants and international traders will be
invited to bid for the 500,000 barrels of crude oil in an international
tender set to be floated in December.
The crude oil is currently being transported by road from Lokichar, in northern Kenya, to Mombasa for stockpiling.
“The
market is now aware of Kenya’s crude and buyers are expected to put in
more aggressive bids as the country’s oil is among those most sought by
refining plants,” said Brian Muriuki a senior adviser in the Ministry of
Petroleum.
Kenya’s first cargo of 240,000 barrels of
crude sold for $12 million under the government’s early oil pilot scheme
(EOPS) in August.
It was moved from the Mombasa port
to Malaysia by MV Celsius Riga sea tanker. The crude was sold at $60 per
barrel, which was 40 per cent above the $43 a barrel the government had
set as the break-even point for the EOPS.
The country was testing the receptiveness of its oil ahead of
commercial output planned for the end of 2023. State-owned ChemChina UK
Ltd was the highest bidder for Kenya’s first cargo.
The second consignment will be sold about 10 months before a final investment decision is taken on the South Lokichar oilfields and an export pipeline to Lamu Port is built.
The second consignment will be sold about 10 months before a final investment decision is taken on the South Lokichar oilfields and an export pipeline to Lamu Port is built.
“We anticipate better pricing
from a larger load. With a larger vessel we expect to get a closer
pricing to Brent crude parity, which serves as one of the two main
benchmark prices for purchases of oil worldwide,” said Mr Muriuki.
Production
Tullow
Oil Plc, Total SA and Africa Oil Corporation are dispatching 16 trucks
daily from Lokichar in Turkana county to Mombasa as crude output has
risen to 2,000 barrels per day from the initial 600 barrels.
The
trucks transport crude from South Lokichar in Turkana to Kapenguria,
Kitale, Eldoret, Nakuru, Naivasha and Nairobi to Mombasa.
It
takes a week for a truck to move from Lokichar to Mombasa and back.
Each flatbed truck carries about 150 barrels of oil in a tanktainer over
a distance of 1,089 kilometres. One barrel is equal to 159 litres.
Tanktainers are secured on flatbed trucks that move for limited hours
daily.
Kenya’s oil is waxy but classified as light and
sweet for having low sulphur content, making it easier to market. Light
crude produces petrol and other high value products that are in high
demand internationally.
Kenya’s crude is almost in the
same category as Nigeria’s Bonny light, which fetches a premium. Bonny
light from Bonny Island fetched about $73.65 per barrel in May unlike
South Sudan’s high sulphur Dar blend oil, which is discounted at about
$10.
Industry players expect crude found in South
Lokichar basin straddling Kenya’s block 10BB and 13T to fetch a premium
almost at par with Bonny light.
Mr Muruiki said an
Afromax sea tanker capable of carrying 500,000 barrels of crude will
ferry the oil, currently being stored at the Changamwe-based Kenya
Petroleum Refineries Ltd tanks in Mombasa.
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