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Kenya to award tender for crude oil pipeline design

Tuesday January 30 2018
pipe

Oil pipeline. Kenya is expected to award a tender for the design of a crude oil pipeline from the Turkana oilfields to Lamu in February. FOTOSEARCH

By KENNEDY SENELWA

Kenya is expected to award a tender for the design of a crude oil pipeline from the Turkana oilfields to Lamu next month, after the project received backing from French firm Total.

Eight companies that were prequalified from the expression of interest floated in 2016 were invited on January 18 to tender for front-end engineering design (Feed) of the 855-kilometre pipeline that is expected to cost $2.1 billion.

The Feed helps set the technical requirements for the line, which are then used to estimate the cost of the project.

“It should take nine months after awarding of the tender to completion of the design,” said Ministry of Energy Principal Secretary Andrew Kamau.

Tullow Oil, Africa Oil Corporation and Maersk Oil have found 750 million barrels of waxy crude in South Lokichar basin, straddling blocks 10 BB and 13T in Turkana county. The first discovery was made in March 2012.

Total commitment

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Total SA of France, which is interested in Maersk’s 25 per cent equity in onshore blocks 10BA, 10BB and 13T in Kenya, has made a commitment to support the Lokichar-Lamu pipeline as the only evacuation route for Kenya crude.

“Following Total’s commitment, the government has consented to a proposed acquisition of the issued and to-be-issued share capital of Maersk in respect of blocks 10BA, 10BB and 13T,” the government said.

Total is also participating in the development of the Hoima-Dar es Salaam pipeline for evacuation of crude from the Albertine basin in Uganda to export markets, through Tanzania.

Final investment decision

Mr Kamau said completion of Feed will pave the way for the final investment decision to be made. Construction of the crude oil export pipeline is slated to start in 2019, and be completed in two years.

“The pipeline will be financed by local and international funds to enable Kenya to earn revenue from crude oil,” Mr Kamau added.

The FEED contract was to be awarded in mid 2017 for building work to start this year and finished in 2020.

The delay in awarding the FEED contract was because the Energy Ministry, Tullow and other partners took longer than expected to negotiate the terms.

An environmental and social impact assessment of pipeline is expected to start in March.

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