Kenya mulls Sudan oil swap as can't process it

By Duncan Miriri

MOMBASA, Kenya (Reuters) - Kenya is considering swapping oil acquired at concessional rates from Sudan because its ageing oil refinery cannot handle it, a top energy ministry official said on Wednesday.

The two African nations signed an agreement for 500,000 barrels of crude oil per month as Kenya sought to cut its import bill at the height of high global oil prices.

"We are still pursuing the oil supply deal with the Sudanese," Patrick Nyoike told Reuters on the sidelines of a regional meeting on oil and gas.

"It is true that their oil cannot be processed at our local refinery but arrangements can be made for swapping it in the international markets."

He said Kenya would seek to exchange Sudanese crude, which is heavy and waxy, with oil suitable for Kenya's refinery. Nyoike added that Kenya needed to modernise the facility situated in the port city of Mombasa.

"We need to do something fairly fast. We need to do something very drastic in terms of upgrading the refinery."

The upgrade will cost $322-$400 million and the government is still looking for a strategic investor for the project.

Kenya mainly buys Murban crude through an open tender system where the winner imports on behalf of all marketers for a given period of time.