Kenya expects to earn its first oil export revenue in June next year

The Government remains adamant that it will reap its first dividend from crude oil export by mid next year.

This is despite Uganda’s decision to abandon the joint pipeline project leaving Kenya to go on its own. According to Deputy Chief of Staff Nzioka Waita, the first export, is expected to be via road and railway transport as pipeline development continues.

Deputy Chief of Staff and Deputy to head of public service Nzioka Waita during the unveiling second quarter 2016 petroleum insight in Nairobi on Friday, June 17, 2016. [PHOTO: JONAH ONYANGO/STANDARD]

Waita, who is also the Deputy Head of Public Service, said the twists and turns that marred the pipeline project for the last 24 months will not derail the interest of the country.

“The State House position is that oil is not there for sale, but it is a means to an end. Petroleum is a facilitator that will help build capacity of the country and slow down on our external borrowing and accelerate infrastructural growth,” he explained.

While admitting that the Government does not yet have an ideal scenario on road transport, Waita said the decision is a temporary way out of the current situation before the five-year pipeline project is completed.

The plan will see oil conveyed by road from Lamu and Lokichar to Kapenguria then to Kitale from where it will be put on rail and transported to Mombasa. Speaking during the release of the country’s second quarter Petroleum Insight, Waita likened the plan to that of walking while chewing gum. He reckons that the road and rail transport must begin before a cost effective method is sought.

According to Waita, the road from Lodwar is being widened to allow big tracks carrying oil to access it. He said that the award of the contract is set for this month. The road infrastructure for oil is also happening concurrently with that for opening Kenya to neighbouring countries.

On whether or not neighboring countries will come on board, Waita said it is up to them to decide if they want to work with Kenya.

“They will make their own decision whether they want to be part of this development agenda. If they do not wish to work with us, our national interests take precedence and we do what we must to exploit our assets,” said Waita.

Pipeline Design

Meanwhile, work on the pipeline is ongoing. According to Waita, discussions on the design of the pipeline are in progress. Consultancy work to look at pipeline from Lokichar through Surgut Valley to Isiolo then down to Lamu is ongoing.
In Mombasa, Kenya Pipeline Company is working on ways to receive oil from the ships that will be docking at the port.

“We have already got commitment for funding for an all-weather road from Lamu to Isiolo. This is to immediately attract investors as well as support activities going on to set up the pipeline,” he said.

He revealed that the Government may also consider extending the pipeline to areas of more strategic nature. The announcement on the way forward is expected to be made once discussions are over.

Kenya made historic announcement in 2012 about the discovery of oil in Ngamia I, but dwindling oil prices have made analysts cast doubt on the viability of Kenya’s oil. However, Waita said that the Government is optimistic of better prices next year.

According to Waita, announcements about new discoveries are no longer received with enthusiasm but that should not mean that the vision to drill oil be dropped.

“We must bite the bullet and it has to be now. Kenya cannot say that it cannot explore oil now. We must,” he reiterated.