Kenya invites tenders in readiness for early oil export

Wednesday March 28 2018

Engineers inspect a newly constructed Oil Jetty at Kenya Pipeline Company in Kisumu, on February 28, 2018.

Engineers inspect a newly constructed oil jetty at Kenya Pipeline Company in Kisumu, on February 28, 2018. KPC invites tenders for modification of pipelines to incorporate a heating component that will facilitate the flow of the waxy Turkana oil to the ships during the early exports later this year. PHOTO | TONY OMONDI | NATION 

By BUSINESS DAILY
More by this Author

Preparations for Kenya’s planned early export of crude oil have begun in earnest with invitation of tenders for the upgrade of the existing pipeline that connects Mombasa’s onshore storage tanks to the ship-loading facility in the Indian Ocean.

The Kenya Pipeline Company (KPC) Wednesday published a notice inviting tenders for modification of the pipeline to incorporate a heating component that will facilitate the flow of the waxy Turkana oil to the ships during the early exports later this year.

Kenya plans to transport the crude from its Turkana wells by trucks to the port of Mombasa for storage and onward shipment to refiners in foreign markets.

Neighbouring Uganda has also announced plans to start its early crude exports later this year through the Kenyan port and is expected to benefit from the refurbishment.

“The anti-corrosion coating in the pipeline will be replaced with one suitable for higher temperature operations and the pipeline will also be insulated to minimise heat loss to the ground,” KPC managing director Joe Sang said in an interview.

Mr Sang said the refurbished pipeline will handle Uganda’s small-scale oil “since both countries’ crude are waxy and need to be handled above ambient temperatures to flow freely.”

The 18-inch pipeline set for upgrade runs 4.5km between the defunct Changamwe refinery that closed operations in 2013 and the Kipevu oil jetty — Kenya’s main docking facility for oil tankers in the Indian Ocean.

The Kenya Petroleum Refineries Limited (KPRL) has since been converted into a storage facility and leased out to the KPC.

The KPC, which operates Kenya’s main petroleum pipeline, plans to use several tanks at Kipevu to store crude export oil from Lokichar oilfields in Turkana while other depots remain available for storing imported refined petroleum.

Heated containers

Turkana and Uganda’s oil, from Albertine Graben oilfields, are both waxy, meaning it will be transported in heated containers, pending construction of long-distance pipelines connecting the fields to sea ports during commercial shipments.

Uganda’s decision to use the Mombasa port for its early oil shipments comes two years after it abandoned Kenya in the planned construction of a joint crude oil pipeline in favour of the Tanzania route.

Kenya plans early crude exports of up to 2,000 barrels per day to be transported to Mombasa by road and loaded on tankers for shipment.

Petroleum secretary John Munyes last week said the pilot scheme would commence end of May, after suffering delays since last July.

The KPC is also set to upgrade the Changamwe storage facilities, besides the impending insulation of the crude pipeline.

“Crude oil truck unloading and measurement facilities will be installed; there will be installation of steam heating coils inside crude oil tanks to heat up crude oil. Steam boilers will also be installed to supply the heat to keep the waxy crude oil fluid,” Mr Sang said.

Kenya initially saw no need to immediately modify the pipeline and had planned to blend Turkana’s small-scale oil with thousands of barrels that remain in the refinery tanks since its closure in September 2013.

Waxy oil

The blending would have diluted Turkana’s waxy oil, enabling smooth flow and removing the need for an insulated pipeline.

The oil blending plan, however, flopped after ministry officials pulled the plug on the early oil export plan that was to kick off last July, citing delays in the enactment of the Petroleum Bill.

The 400,000 barrels of oil that had sat in refinery tanks was exported separately last year, enabling oil marketers to recoup losses arising from its importation four years ago.

“The residual crude oil and other hydrocarbon stocks were exported in August 2017 and the revenues generated were allocated across the oil marketing companies,” the KPC said.

The refinery pipeline had earlier been modified to allow crude move in reverse from storage tanks to ships.

The pipeline was earlier designed to move crude oil one direction from ships to the refinery — which has not been operational since 2013 after plans for a $1.2 billion (Ksh120 billion) upgrade were abandoned.  

The early oil exports would be followed by commercial production and exports after the pipeline is completed in 2021.