Kenya has unveiled an Early Oil Pilot Scheme, in terms of which it will produce 2 000 bbl/d of crude oil from June next year.
Ministry of Energy and Petroleum principal secretary Andrew Kamau says “the Early Oil Pilot Scheme is not a money-making operation”, explaining: “We are simply proving our capacity to export crude oil and preparing the market for full production.”
He adds that Kenya has ascertained the availability of recoverable crude estimated at 750-million barrels, with this figure likely to increase to one-billion barrels.
The 2 000 bbl/d to be produced during the Early Oil Pilot Scheme initiative will be transported by road from the oilfields, in Lokichar, in the north of the country, to the port of Mombasa.
“Although small-scale, the scheme will mark the first major milestone in Kenya’s oil and gas industry, producing and exporting crude oil for the first time in the country’s history,” says Kamau.
Although government is determined to implement the scheme, civil society organisations have opposed the scheme on the grounds that it will be an expensive venture for the Kenyan taxpayer.
Kenya Civil Society Platform on Oil and Gas coordinator Charles Wanguhu says Kenya risks losing $40-million, given that the scheme is being implemented at a time when crude oil prices are very low, at around $50/bl.
“In the absence of a significant increase in either the oil price or export volumes, the scheme is a money-losing venture. The volumes are too low to make any economic sense at this initial stage of oil resource extraction,” he argues.
He adds government should shelve the scheme and instead concentrate on the full field development proposal, which involves the construction a 891-km-long crude oil export pipeline from Lokichar to Lamu.
When the pipeline is complete, the country will be able to start producing around 75 000 bbl/d, ramping up to around 150 000 bbl/d over time.