Kenya’s plans of joining the oil exporting league moved one step forward on Thursday when the Cabinet approved a commercialisation plan by the Ministry of Energy.
The country now hopes to start exporting 4,000 barrels of crude oil daily by June next year, but the initial plan is 2,000 barrels.
The crude will be transported by road from the Lokichar basin oil fields to Eldoret, from where it will be loaded onto a train or trucked to Mombasa.
The daily yield translates to between Sh8.3 million ($82,000) and Sh16.6 million ($164 million) daily, given that a barrel of crude oil is currently fetching Sh4,160 ($41).
Annually, Kenya could earn between Sh3 billion and Sh6 billion from the initial export of crude oil.
The country joined the oil league when African Oil and its partner Tullow Oil first discovered oil in the Lokichar basin of Turkana County in 2012, with reserves estimated at 600 million barrels.
The approval was made on Thursday during a special Cabinet meeting chaired by President Uhuru Kenyatta at State House, Nairobi.
“The country is now getting ready to full commercial exploitation,” read a statement issued after the meeting. Under this arrangement, the statement continued, the crude oil will be refined at the Kenya Petroleum Refinery, which was re-acquired by the government from Essar Energy in June at a cost of Sh508 million ($5 million).
Already, rehabilitation of heating tanks in readiness for the first line of refining has started at the Mombasa-based refinery, which has now been placed under the Kenya Pipeline Company (KPC).
Three weeks ago, the government performed the first test of transporting crude oil after two trucks ferried the first samples from Lokichar via Eldoret to Mombasa. On Thursday, the Cabinet said that it was upgrading the Eldoret-Leseru-Lokichar road at a cost of Sh3.2 billion. It is also rehabilitating the Kainuk Bridge in Turkana County to allow for larger and heavier trucks to transport the oil from the Lokichar basin to Eldoret.
The Cabinet also approved the construction of Kenya’s pipeline from Lokichar to Lamu, with government sources indicating that bids for firms interested in the design will be out in the next two months.
Kenya, in April, decided to construct its own Sh425 billion pipeline after Uganda abandoned the Kenya’s route in favour of Tanzania.