By Morris Aron
Spanish company — Alatec Consulting — has won a tender to undertake a feasibility study for a Sh9 billion offshore loading and offloading jetty for crude petroleum, as well as storage to be built at Kipevu Oil Terminal to alleviate oil shortage. The firm emerged tops from a group of 20 companies.
The announcement moves the country closer to sorting its oil woes by providing Kipevu Oil Terminal, which is the primary entry point for crude oil and petroleum products into Kenya as well as the East African region, with some respite.
"Following a rigorous tender evaluation process, we have selected Alatec Consulting from a list of firms that bid to carry out the feasibility study, and expect the final feasibility report in six months," said National Oil Chief Executive Officer, Sumayya Athmani.
The CEO indicated that Alatec was awarded the tender following a competitive tendering process that was commenced through an International Expression of Interest in December 2010.
The project, expected to be commissioned by end of 2013, comes after delays and price escalations blamed on the current challenges experienced in offloading of petroleum products. Kenya is estimated to be losing over Sh9 billion annually in demurrage charges incurred as a result of delays to offload tankers bringing crude oil and petroleum products into the country.
Refined products
The terminal channel receives refined products destined for the Kipevu Oil Storage Facility and crude oil for the Kenya Petroleum Refinery. A smaller jetty at Shimanzi in Mombasa only receives refined petroleum products destined to oil storage facilities owned by private marketers.
In addition, small tankers call frequently at the port because of the shallow water depths at the Kilindini channel and at the main jetty, the Kipevu Oil Terminal, which allows only tankers of a maximum laden weight of 80,000 metric tonnes to offload at the facility.
With many small vessels calling regularly, the queues to discharge may last as long as a month with the waiting charges being eventually borne by the taxpayer. Although the Government has already begun dredging the port to increase the depth of the harbour to 15 metres, modern super tankers have a displacement requiring up to 25 metres depth at the harbour.
Least-cost
NOCK said that the offshore jetty would provide a faster and least-cost solution for easing the congestion at Kipevu Oil Terminal.
An offshore jetty is also cheaper to build and maintain since there is no dredging required for serving larger vessels. This is because the offshore jetty located in the open seas, allowing berthing of super large tankers. This will serve to enhance shipping economies of scale reducing the high freight costs being borne by the industry.
Offshore jetties are common worldwide and in Africa, including the Kurasini Oil Jetty (currently being upgraded) at the port of Dar-es-Salaam in Tanzania, Tema Offshore Mooring in Ghana, the port of Durban in South Africa, Lucina and Gamba fields in Gabon, Malongo field in Angola, in several places in Egypt and Nigeria, among others.
National Oil expects to finance the project through a public-private partnership arrangement.
Primary jetty
"With a single primary jetty serving Kenya and much of East Africa, the high demurrage costs incurred by the industry, the primary location of the Kenyan coast relative to the Arabian Gulf and the Far East coupled with the increased interest in oil and gas exploration activities in East Africa, we anticipate keen interest from potential investors. In addition through a public-private partnership National Oil will benefit from knowledge and expertise transfer in management of world class jetties and terminal facilities," said Ms Athamani.
