Kenya to build LNG storage plant

Saturday November 17 2012

Songo Songo LNG plant in Tanzania. It is the only country in the region that produces power from natural gas. Picture: File

Songo Songo LNG plant in Tanzania. It is the only country in the region that produces power from natural gas. Picture: File 

By KENNEDY SENELWA, Special Correspondent

Kenya plans to construct a Ksh38 billion ($450 million) offshore liquefied natural gas (LNG) importing, handling and storage facility.

Ministry of Energy officials said the government had already outsourced UK consultancy firm Mott MacDonald to prepare tender documents for the 170,000 cubic metre facility, which will be built through a public-private partnership.

Details on when the tender will be floated are not clear, but once it’s awarded, construction is expected to take three years. The project is expected to be operational latest by 2017.

Under the terms of the agreement, the wining investor will source for funding, build and operate the LNG facility for 30 years, before handing it over to the government. The Kenya Ports Authority will provide the land.

Mott MacDonald in conjunction with Nairobi based Kurrent Technologies Ltd carried out both the environmental impact assessment and feasibility studies for the project.

“The feasibility study showed that it is economically viable to build a bulk import facility in Mombasa to supply natural gas for power generation among other uses,” said Sanjay Gandhi, Kurrent’s chief operating officer.

The study, which was financed partly with a World Bank $153 million Energy Sector Recovery Project facility, assessed LNG demand for power generation, industrial use and other end-users for the next 20 years.

It assessed supply structure for shipping, re-gasification, transportation and distribution with regard to potential market demand.

The facility will be a big boost to the Kenya Electricity Generating Company (KenGen) which plans to build a 500MW LNG fuelled power plant on the Kenyan coast at a cost of $400 million.

An associated project of the LNG import terminal is laying an underground pipeline to deliver natural gas to the Mombasa based Kipevu 1 and Kipevu III thermal power plants of KenGen, currently using heavy fuel oil.

Kipevu I and Kipevu III thermal electricity plants use Warstila engines, which can consume natural gas with minimal modifications. This will reduce KenGen’s cost of running the two electricity generating facilities.

The project could also benefit the 90 MW Rabai power plant near Mombasa that could switch to natural gas. The power plant owned currently uses heavy fuel oil.

“In future, it will also handle natural gas discovered offshore Kenya as there is potential for exploration firms finding commercial quantities. Apache Corporation encountered natural gas in Mbawa-1 well recently,” said Energy Permanent Secretary Patrick Nyoike.

The project could also tap into the over 47 trillion cubic feet natural gas discovered off the coast of Tanzania. The East African Community secretariat has already conducted a feasibility study to set up the Dar es Salaam-Tanga-Mombasa natural gas pipeline.

Tanzania is the only country in the region that produces power from natural gas, from which it gets almost half of its electricity.

Recently, the country launched a $1.2 billion project that is expected to generate about 2,780MW power from natural gas.

Additional reporting by Peterson Thiong’o