Kenya says crude oil capacity insufficient for refinery

Crude oil deposits so far discovered in Kenya are insufficient to allow for the building of a refinery, a senior petroleum ministry official said on Tuesday.

Kenya discovered commercial oil in 2012 in its Lokichar basin, which Tullow Oil estimates contains an estimated 560 million barrels in proven and probable reserves.

Tullow has said this would translate to 60,000 to 100,000 barrels per day of gross production.

It is proven the world over that a refinery would make money only when it has refining capacity of at least 400,000 barrels a day, Andrew Kamau, principal secretary at the petroleum and mining ministry, told reporters.

“So far we have done 80,000 barrels in a few months, that’s what we will be able to do in one day when the pipeline is fully running. So of course if you look at the magnitude, the order of magnitude, the pipeline is a clear way now on this one,” said Kamau..

Kenya, which does not export any oil, previously had a crude oil refinery at its port city of Mombasa but halted operations in 2013 after plans for a $1.2 billion upgrade were abandoned on the advice of consultants who said it was not economically viable.

“I think it’s not something that we want to burden the economy with, if we can get additional funds to go out and build additional infrastructure that is more the aim. I know some people it’s an anathema to have the crude oil exported and then you import refined product but at the end of the day if you can import refined product cheaper than you can refine it yourself that’s what makes more sense,” added Kamau.

The government announced its intention to list state-run National Oil Corporation of Kenya in November 2017 to raise $1 billion in a dual listing on the Nairobi bourse and London Stock Exchange by early 2019.