OSLO—Companies developing Kenya’s first oilfields expect to conclude agreement on construction of an export pipeline by the middle of this year, according to Toronto-listed Africa Oil, one of the partners.
Oil could account for about one-tenth of Kenya’s government revenue, on par with its biggest current export, tea, once production reaches its peak, officials say. Production is expected to start around 2021-2022.
London-listed Tullow Oil, which struck oil in Kenya six years ago, and its partners proposed in January to transport oil from the land-locked Amosing and Ngamia fields via pipeline to the Indian Ocean port of Lamu 750km away.
“We’ve got two pipeline companies bidding … Sometime before mid-year we expect to come to an agreement,” Africa Oil CEO Keith Hill told an industry conference.
“We are discussing with a couple pipeline companies about coming in as a strategic partner on the pipeline,” he later told Reuters without naming the companies.
Tullow said in its 2017 annual report that the initial development stage will target about 210 million barrels of oil out of total 560 million bbl/d of proven and probable reserves, with daily plateau production of 60,000 to 80,000 barrels per day (bbl/d).
Production could potentially increase to 100,000 bbl/d or more, Tullow added.
Tullow estimates gross capital expenditure for the first stage to be $2.9 billion, including $1.1 billion for the pipeline.
Hill said the partners were aiming to approve project’s final investment decision (FID) in the second half of 2019.
Tullow has said it would seek to reduce its stake from 50% once the FID decision is reached.
Africa Oil, which has previously sold part of its stake to Maersk Oil, was not looking to divest more, Hill said.
“We are getting more comfortable and staying to be a producer in Kenya … We are not looking to sell,” he told the conference.
French oil major Total won Kenya’s approval in January to acquire stakes in the Tullow-operated blocks from A.P. Moeller-Maersk after committing to the pipeline’s project.
Last year Kenya lost a bid for a pipeline to carry crude oil from neighboring Uganda, which could also have been used to transport oil from Kenya’s fields.
Recommended Reading
US Drillers Add Oil, Gas Rigs for First Time in Five Weeks
2024-04-19 - The oil and gas rig count, an early indicator of future output, rose by two to 619 in the week to April 19.
Strike Energy Updates 3D Seismic Acquisition in Perth Basin
2024-04-19 - Strike Energy completed its 3D seismic acquisition of Ocean Hill on schedule and under budget, the company said.
Santos’ Pikka Phase 1 in Alaska to Deliver First Oil by 2026
2024-04-18 - Australia's Santos expects first oil to flow from the 80,000 bbl/d Pikka Phase 1 project in Alaska by 2026, diversifying Santos' portfolio and reducing geographic concentration risk.
Iraq to Seek Bids for Oil, Gas Contracts April 27
2024-04-18 - Iraq will auction 30 new oil and gas projects in two licensing rounds distributed across the country.
Vår Energi Hits Oil with Ringhorne North
2024-04-17 - Vår Energi’s North Sea discovery de-risks drilling prospects in the area and could be tied back to Balder area infrastructure.