President Uhuru Kenyatta yesterday flagged off the first four tracks carrying 600 barrels of oil under the Early Oil Pilot Scheme at the Ngamia 8 oil well in Turkana County. The country is targeting to transport 2,000 barrels per day to Changamwe storage tanks under this scheme.
This means the country’s first oil exports are expected to begin in December given that it will take at least 400,000 barrels to fill one oil tanker ship.
“Today, Kenya becomes the first country in East Africa to export oil. I thank all investors who believe in this project that is expected to turnaround social economic life for not only Turkana and Kenya, but the region at large,” he said.
The President thanked Turkana county leaders for accepting his invitation to discuss and agree on revenue distribution adding that the agreement would be ratified in parliament this week.
Under the new deal, National Government will receive 75 per cent of proceeds from oil exports while the county government will receive 20 and five per cent respectively.
The EOPS had been postponed since June 2017 due to disputes over how revenue would be shared.
Last week, Tullow Oil picked Britain firm, Wood to design the proposed Lokichar to Lamu Crude Oil Pipeline.
The firm will provide the first phase of front-end engineering (FEED) services, setting the technical requirements and estimating the installed cost for the pipeline system.
“We are delighted to be working with the Pipeline Project Management Team on this project which leverages Wood’s broad capabilities. Our independent onshore pipeline engineering expertise combined with the latest project delivery technology will allow us to challenge the design, working to reduce cost and boost efficiencies,’’ said Wood chief executive Bob MacDonald.
In late January, French firm Total SA committed to invest in the Lokichar-Lamu pipeline in exchange for shares in Maersk Oil Oil Exploration International (Mogas Kenya) blocks.
The cost of the pipeline is estimated at $1.1 billion (Sh100 billion), with a further $2.9 billion (Sh300 billion) needed for upstream operations. A final investment decision on the upstream and pipeline plans is expected in 2019.
Principal Secretary, State Department of Petroleum Andrew Kamau said the government has already identified an audit firm to evaluate exploration costs incurred by investors even as the country expects to realize full field development in 2021.
“We have already selected an audit firm to evaluate costs incurred. We are here to give investors needed support to ensure that Kenya join oil producing league in the next three years. We have commenced discussions on incentives like tax holiday for investors,’’ said Kamau.
“The security of oil to be transported is guaranteed. The state recently agreed with the local community on revenue sharing. Final touches are being done to roads in the regions to allow smooth transportation.” he said.
Tullow Oil Country manager Martin Mbogo said that his firm is conducting a robust environment and social impact assessment for crude oil production and road transportation in line with NEMA and international best practices.