October 24, 2017 / 1:57 PM / in a month

Kenya signs agreement for crude oil pipeline study

NAIROBI (Reuters) - Kenya said on Tuesday it had signed an agreement with a consortium of three firms for a feasibility study on a proposed pipeline to transport crude oil from the country’s oilfields to a seaport on the Indian ocean coast.

The East African country discovered commercial oil reserves in its Lokichar basin in the country’s northwest in 2012.

Recoverable reserves are estimated at 750 million barrels and considered feasible for production at a price of $55 a barrel.

In a statement published on its website, the Energy and Petroleum Ministry said the study by the consortium which includes Tullow Oil, Africa Oil and A.P. Moller-Maersk, would include a Front End Engineering Design (FEED) for the pipeline.

Tullow and Africa Oil were first to discover Kenya’s crude reserves and the two firms were 50-50 partners in blocks 10 BB and 13T when the discoveries were made.

Africa Oil has since sold a stake to A.P. Moller-Maersk.

“This is an important step forward for ... the future of oil and gas in Kenya,” Martin Mbogo, Tullow’s Kenya country manager, was quoted as saying.

Charles Keter, cabinet secretary for the Energy and Petroleum Ministry, said Kenya was committed to developing “a modern midstream infrastructure” to help export the country’s crude to the international markets.

“This agreement marks a significant milestone to realising this goal,” he said.

The ministry said the pipeline - to run 820 km between Lokichar and Lamu on Kenya’s coast – would cost $2.1 billion and was expected to be completed in the first quarter of 2021.

Writing by Elias Biryabarema; Editing by George Obulutsa and David Evans

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