OIL’S WELL IN KENYA

OIL’S WELL IN KENYA

Kenya formally announced oil discovery in Turkana (Ngamia 1 wildcat well, Lokichar Basin) in 2012 and this was met with a lot of optimism and “Jubilation” (for lack of a better word). The initial estimates of the prospect was 250 million barrels in blocks 10BB and 13T. The oil find was sweet (Low Sulfur content) waxy with an API value of above 30°(density)[THE WAXY PART IS WORTH NOTHING]. The reserve has now been scaled up to about 386 million barrels of oil after well tests in Ngamia 1, Twiga South 1 and Etuko prospects. This is quite a significant amount but let’s put the facts straight.

Currently Kenya consumes 80,000 barrels of oil per day (bopd) and this would sustain our current demand for 13 years, 2 months and 19 days that is if our demand doesn’t grow from what it is now and no export is factored in. Let’s get real, if we are to reap maximum benefits, exporting would provide a larger market and much needed foreign exchange, so extracting 200,000 bopd, would reduce the lifespan to 5 years 3 months and 18 days.(One presidential term or so)

A normal topping refinery not the fancy hydro-cracking kind would cost USD 4 billion (~ Ksh 348 billion) while the reserve is worth Ksh. 33.6 trillion (this would fund our current Ksh 1.6 trillion budget for 20 years) which is justified. Transportation to the refinery would require a heated pipeline as the rheology of waxy crude oils causes handling difficulties. (In India the waxy oil pipeline has 1MW heating station at every 20 Km interval, alternatively, dewaxing at the source(well site) using MEK-Toluene mixtures similar to what is done to the Sudanese Nile Blend.) This would increase operational cost, the waxy element can be use to make lubes (consolation).

Tullow Oil Plc, the operator, and its partners have to recoup their investment and the government’s stake is a mere 15% of the reserve but also royalties, surface fees and taxes are to be factored in. Roughly, lets put a claim of 60% for the lifetime of production that translates to Ksh. 20.16 trillion. This isn’t to put you off but for the bigger picture to be realized. Its estimated that the total reserve (unconfirmed) is 10 billion barrels as compared to Uganda’s 1.3 Billion (Though their discovery was 7 years ago, they’re still importing oil products???). Bearing this in mind, Kenya can be the oil hub of the region if it plays its cards right, like Malaysia (Kenya is always compared to this country, with PetronasNOCK‘s equivalent  and the new Seven Sisters, that’s a big-BIG leap). Imagine Nairobi’s or is it Konza’s skyline being like this

800px-kl-skyline_night_hdr1
Malaysia skyline credit

 Either way we are not far off.

Beautiful view of Nairobi at night
Beautiful view of Nairobi at night (Photo credit )

 Back on track, the era of dependency on the Middle East is about to end and we’ll be able to enjoy cheap fuel. Prior to Gadaffi’s (This guy was great) “assassination”, a litre of petrol cost $0.14 ~ Ksh 12.25 in Libya. Transportation, storage and taxes are the biggest contributors to high fuel charges in Kenya. With Oil Libya already here, maybe the adjustment would be replicated plus we gave them Grand Laico Regency they owe us and the gesture of good faith has to be reciprocated. Funny timing is VAT has been imposed on oil products and the adoption will be staggered over 3 years so the Libya case wont be a reality here. 🙁 . Either way we will still drive to the gas stations to fill up our Passat (Guzzlers not included).

Written by Nambiro Edgar

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The RocKe Scientist is an award winning earth science platform based in Kenya.