× Business BUSINESS MOTORING SHIPPING & LOGISTICS DR PESA FINANCIAL STANDARD Digital News Videos Health & Science Lifestyle Opinion Education Columnists Moi Cabinets Arts & Culture Fact Check Podcasts E-Paper Lifestyle & Entertainment Nairobian Entertainment Eve Woman Travelog TV Stations KTN Home KTN News BTV KTN Farmers TV Radio Stations Radio Maisha Spice FM Vybez Radio Enterprise VAS E-Learning Digger Classified Jobs Games Crosswords Sudoku The Standard Group Corporate Contact Us Rate Card Vacancies DCX O.M Portal Corporate Email RMS

Bruised, Kenya now starts process to build own pipeline

By Paul Wafula | May 7th 2016

Kenya has started the process of building own crude oil pipeline days after losing an earlier deal to Tanzania.

The Government through the Ministry of Energy and Petroleum announced it is scouting for a consultant to carry out an engineering design – Front End Engineering Design (FEED) – for the pipeline from Lokichar in Turkana to Lamu.

“The main objective of the FEED is to perform the necessary designs for all engineering disciplines for the crude oil export pipeline system which shall include all the activities and deliverables as will be detailed in the Request for Proposal,” the notice from the Energy ministry inviting bids, reads in part.

The ministry is also looking for another consultant to carry out an environmental and social impact assessment for the proposed Lokichar – Lamu crude oil export pipeline.

Kenya has been forced to go it alone after Uganda chose an alternative route through Tanzania in what will see its neighbours build a similar facility at Tanga port. Kenya’s case has been further complicated after South Sudan said it was contemplating an alternative route via Ethiopia to Djibouti instead of South Lokichar in northern Kenya through Isiolo to Lamu on the Indian Ocean.

The rival projects raised fears of over-investment in oil transport infrastructure given the finite nature of the resource, despite hopes that ongoing explorations will yield more. They have also taken the shine away from the Lamu Port South Sudan Ethiopia Transport (Lapsset) project, watering down its viability as it had been largely marketed as a joint project for the region.

It is not yet clear how viable the Lapsset project is given the current developments and how Kenya will afford the multi-billion project. Kenya has discovered 600 million barrels of crude oil in South Lokichar and 6.5 billion barrels of oil have been found in western Uganda.

A joint pipeline was to be built from Hoima in western Uganda through Lokichar to Kenya’s Coast to enable the two countries to start exporting their discoveries. But left on its own, Kenya appears to have hit the ground running looking for at least two consultants for the project.

The Energy ministry says after the discovery of commercial oil reserves in the Tertiary Rift Basin in Kenya, a feasibility study and preliminary engineering designs for a crude oil export pipeline was undertaken.

“The government of the republic of Kenya (GOK), through the ministry of energy and petroleum, therefore intends to conduct an Environmental and Social Impact Assessment (ESIA) and Front End Engineering Design (FEED) for the crude oil export pipeline from Lokichar to Lamu,” a second notice from the ministry reads in part.

“The ministry invites pre-qualification applications from local and international firms or consortia with experience in carrying out ESIA for similar pipelines for consideration to undertake the activities.” The consultant will be required to review all the ESIA screening studies during the feasibility study phase.

By Road and Train

Applicants will be required to have experience in carrying out a minimum of three such studies in the past, with one of them specific to oil and gas pipelines with pump stations, depots and marine loading facilities.

The firms for the ESIA should also have an annual turnover of not less than Sh1 billion ($10 million) for the last five years while those for the engineering design must have a turnover of Sh5 billion. “Applicants shall demonstrate their legal capacities to enter into a contract for the provision of the services by complying with the requirements detailed in the EOI document,” the notice adds.

Before the pipeline is completed, Energy Cabinet Secretary Charles Keter said the country would be transporting oil by road and train. After it is complete, Kenya expects to pump about 100,000 barrels a day through the pipeline.

Share this story
Why forced bank consolidation plan is questionable
Conventional wisdom among some bankers that forced consolidation is the only way to strengthen banks to withstand industry shocks, is questionable on several counts.
Absa Bank net profit for 3 months up 24pc
The performance was mainly driven by growth in interest income, particularly in the small and medium enterprises.