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China-Africa Trade Information Service
info.afrindex.com
China-Africa Trade Information Service
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The oil deposits in the east African nation are estimated at 750 million barrels. Leading the pack in assisting the country reach its full oil potential is British explorer, that has had a presence in the country for the last 5 years. Kenya’s oil is good quality with low sulfur content and good density but with a wax-like consistency, meaning it must be transported at a high temperature to keep it liquid thus making the cost of exporting it higher.
Martin explains “The oil is within what you call good quality PI in the range of 28-35 on that scale. On the API scale this is relatively good oil with potentially good yields, we acknowledge that there is some works in the oil (which) probably makes it a little more difficult to move but in terms of yields very very interesting.”
Infrastructure
Despite all the good things that oil discovery is hoped to bring, infrastructure in northern Kenya where the drilling is happening is in a deplorable state. Around Turkana which is deep inland, roads are almost non-existent thus the oil will only be available for export after the construction of a 900 kilometer pipeline to an new port, whose construction is due to start next year in Lamu on the Indian Ocean coast, at an estimated cost of $5 billion. The pipe is planned to move around 100,000 barrels per day.
In the meantime, Kenya has announced a two-year “pilot programme” which aims to move a modest 2,000 barrels a day by road, more than 1,000 km to the port of Mombasa. The government of Kenya presents the road exports as a way to “test the market” and says buyers in India and China are interested.
Review
The Kenya Civil Society Platform on Oil says the early pilot scheme is a distraction from what really matters, “ that is getting the pipeline done and starting production properly, adding that it is “not good value for money.”According to calculations by his organisation, production has to double and prices increase significantly if the government is to avoid losing tens of millions of dollars under the pilot scheme. The government estimates the pilot programme will be profitable at $42, according to energy minister, but the civil oil organisation say the real break-even is closer to $52.
