Mombasa-based crude oil processing refinery is set for a $1 billion upgrade subject to the approval by the environment regulator.

The objective of Kenya Petroleum Refineries Ltd (KPRL) is to improve the refining margin, utilise existing facilities and improve quality of refined oil products to meet current and future specifications.

Gibb Africa said that after modernisation, the plant will fully utilise current excess heavy fuel oil with the commodity being converted to high value products such as petrol and diesel.

“The configuration of the refinery is a hydro-skimming type processing medium sulphur crude oils such as Murban and Arab Medium,” said Gibb in an environmental impact assessment study done for KPRL.

KPRL is currently installing a 9.2-megawatt power plant to provide electricity to the refinery. The plant will run on heavy fuel oil and cost an estimated $13.5 million.

KPRL also plans to build a thermal conversion unit that converts fuel oil into products like liquefied petroleum gas (LPG), petrol and diesel.

KPRL produces an average of 30,000 metric tonnes of LPG annually; however, the upgrade will enable it to produce more LPG for both the Kenyan market and export. KPRL, the only refinery in East Africa, has not been modernised for many years.

Tanzania closed its refinery in the 1990s and Uganda has not started building a plant to process its newly discovered crude oil.

KPRL’s distillation unit II was commissioned in 1974 and distillation unit I launched in 1963.

Refined fuel from the refinery is used in Kenya, northern Tanzania and Uganda among others in the region.

The Mombasa based plant’s installed capacity is four million metric tonnes per annum (MMTPA) but it only processes 1.6 million metric tonnes of imported crude oil a year.

Enertech Ltd, a consulting company, said that upon completion of the modernisation exercise, the refinery will become more competitive processing many types of crude oil imported from other countries.

“Upgrading will enable KPRL to handle even crude oil from Sudan,” said Enertech director Charles Kinyanjui.

Upgrading will enable KPRL to produce low sulphur diesel and other environmentally friendly products in line with global trends besides having steady electricity from the 60MW (MW) power plant.

KPRL was required from April 1 to change operations to merchant plant importing its own crude oil for processing and selling products to marketers at a profit.

The Mombasa plant currently operates as a toll refinery charging marketers a fee for processing of crude imported under competitive open tender system by one firm.

Kenya’s Prime Minister Raila Odinga said the change of plan for KPRL to start importing its own crude oil is aimed at putting in place legal frame work to ensure the process is well implemented.

“This extension is to allow for publication of necessary legal notices by concerned government institutions, after which KPRL shall proceed to arrange funding for the expected crude oil importation,” he said.

The statement issued by the Prime Minister means refined petroleum products marketing companies will continue to bear the burden of importing crude oil from Abu Dhabi National Oil Corporation.