South Lokichar exports planned for June

30 August 2016, Week 34, Issue 654

Production from the South Lokichar Basin will begin in March 2017, with exports beginning in June, Tullow Oil executives agreed in a meeting with Kenyan President Uhuru Kenyatta last week. 

Tullow, Africa Oil Corporation and Maersk Oil hold around 750 million barrels of crude in the basin, straddling Blocks 10BB and 13T in Turkana County. Early production was initially planned to start in July 2017 and Tullow’s chief operating officer, Paul McDade, agreed that the first cargo of crude would be exported from Mombasa port in June next year.

Early output will be made possible by moving crude in trucks for 320 km from Lokichar, in the northwest, to Eldoret in western Kenya. Then it will be loaded on to rail wagons for the 826 kms journey to Mombasa, on the Indian Ocean shoreline. McDade said 2,000 bpd of crude would be produced initially. 

Tullow has an aggressive exploration program that will lead to drilling of at least eight wells in North Lokichar to scale up production.

“This will take mean recoverable resources to over 1 billion barrels, from the currently estimated 750 million barrels,” he said. Crude oil will be stored at Kenya Petroleum Refineries Ltd (KPRL) in Mombasa before being exported.

“We have started and we are not moving back. We want to be at the top of the pile. We have set a path and by 2019, Kenya is going to be a major oil producer and exporter,” said Kenyatta.

For exports to scale up, though, a major pipeline will need to be built from the fields in South Lokichar to the port of Lamu, in the north of Kenya. The 855 km link will cost around US$2.1 billion and replaces a previous plan involving co-operation with Uganda. Kampala struck a deal in April this year to export its Lake Albert resources to Tanga, in Tanzania, via another pipeline. 

Kenya’s Energy Cabinet Secretary, Charles Keter, said plans to construct a crude oil export from Lokichar to Lamu port along the Indian Ocean shore line were progressing well.

He said Kenya’s government, with its upstream partners Tullow, Africa Oil and Maersk Oil, have concluded a joint development agreement (JDA) for the development of a Lokichar-Lamu pipeline. Kenya’s government will soon award a consultant contract for front-end engineering and design (FEED) with another contract covering the environmental study.

Kenya’s government has extended by three years to 2020 the exploration period for block 10BB and 13T hosting South Lokichar basin. Tullow has stockpiled at Lokichar 70,000 barrels of crude obtained from extensive well testing programme on the Ngamia and Amosing fields.