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Washington To Help Kenya Raise $18 Billion For Oil Pipeline

The U.S. government says it will help Kenya get the financing it needs to build an $18 billion pipeline from the oil fields in the country’s northwest to its southeastern Indian Ocean coast to help it become a net exporter of oil.

The pipeline would stretch nearly 500 miles from Lokichar in Kenya’s Great Rift Valley to the coastal town of Lamu, and would be an almost impossibly expensive project for the East African nation. Yet there is enough oil there to make the plan worthwhile. The pan-African financial institution Ecobank Transnational Inc. says it has proven reserves of about 1 billion barrels of crude oil.

Yet the London-based energy company Tullow Oil Plc, which already has discovered 600 million barrels of crude in the South Lokichar Basin alone, has yet to begin drilling there because of the persistent low price of oil.

Related: Oil Touches $32 Handle As Panic Takes Hold Of Chinese Markets

In order to get the project moving, U.S. Ambassador Robert Godec met Tuesday with Kenya’s energy secretary, Alfred Keter, telling him that Washington would help Nairobi find the $18 billion it will need to build a pipeline that would move its oil to the coast and, from there, to foreign customers. The initiative is known as PowerAfrika.

“Kenya needs $18 billion worth of financing [for building the pipeline],” Godec said after the meeting, “so one of the questions we are discussing is how we can work together with the private sector and governments to raise that sum, to find ways to make certain that this financing become available.”

Keter said he hoped the U.S. commitment to financing the pipeline would end Tullow’s reluctance to begin drilling in an oil-rich area and help the Kenyan government keep its promise to modernize the country.

Related: These Two New Sources Of Financing Give Hope To The Energy Industry

“Commercially viable oil reserves were discovered in 2012 [in Kenya],” Keter said, “but to date nothing has happened, which makes Kenyans wonder what happened. We are confident that the PowerAfrika initiative will help us realize our pledge to Kenyans.”

Keter added that his country is eager to get begin producing oil. “I think that that we need to fast-track this project so that we join the many countries who are exporters of oil, and so that we can lower the cost of fuel in the country,” he said after the meeting with Godec.

Related: Petro Currencies Under Fire As Oil Keeps Sliding

Godec agreed, saying the United States also hopes to help finance of Kenya’s capacity to establish a grid to generate and distribute electricity more quickly to meet the country’s growing demand. The two sides also are discussing how they can cooperate on extracting oil and transporting it to customers.

Although oil was found in Kenya in 2012, the country is in a race with Uganda, its neighbor to the west, which discovered oil in its territory nearly nine years ago. The two countries are vying to become the first in their region to become a net exporter of oil.

By Andy Tully of Oilprice.com

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  • willy on April 19 2016 said:
    Comments that's only way USA can help Kenya to unemployment in country. we have slot of skilled people youths also if the USA can open up for skilled workforce in the USA. thy can go to books see those Kenyan who worked for an 7USA company in Afghanistan and other
    r war zone
  • Frank on January 14 2016 said:
    @ Miles. 1000s of jobs? no. keystone would have created 35 permanent jobs. and that was per the overly optimistic state department assessment. this kenya move is still absurd and hypocritical, but not based on your fabricated jobs assertions for keystone.
  • Joseph Sabato on January 13 2016 said:
    I would like to advise Americans not to panic on the Kenyan pipeline. The American government, through its embassy in Nairobi, has since clarified that the media misquoted the ambassador to Kenya when it reported that he had said that the US would help Kenya build the pipeline. What the ambassador originally said was that the US government was encouraging a consortium of American companies that had expressed interest in the so-called LAPSSET project (https://en.wikipedia.org/wiki/Lamu_Port_and_Lamu-Southern_Sudan-Ethiopia_Transport_Corridor) to proceed with the idea:

    http://www.nation.co.ke/business/US-denies-direct-support-for-Kenyas-oil-pipeline/-/996/3032384/-/k5aujmz/-/index.html

    If the companies proceed with the investment, the American tax payer will not loss any money to the "third world" African country. However, Americans will gain through the private investment.

    On the other hand, if Americans reject the project, the Chinese will be only too happy to grab the opportunity. The Chinese love such monumental projects, especially on the African continent. They are the primary reason why China has grown economically so spectacularly in recent times.

    The question is whether or not Americans can compete the Chinese for the business opportunities that are currently on offer across Africa.
  • Philip Branton on January 11 2016 said:
    Great comments here.......not only are we looking stupid with comparisons to the Keystone fiasco. What is more telling is the outright enslavement of the Kenyan citizens too by keeping them tide to fossil oil without any consideration and choice with respect to their access to geo-thermal energy. The Horn of Africa should totally be a producer of geo-thermal energy to power the entire Africa continent with high speed SKYTRAN mag-lev transportation. It would move the entire continent ahead of everyone else. The raised and elevated transportation would also keep migrating herds for tourism too boot. Has this website or CNBC ever revealed an energy comparison between Keystone and the Yellowstone Caldera National geo-thermal energy Choice "pipeline" for readers to be aware of and have a choice..?
  • CaptainAmerica on January 10 2016 said:
    Classic Washington.....kill our own Keystone pipeline but help a third world nation get theirs to COMPETE with our U.S. oil.

    And the Beltway Pundits are "dumb-founded" as to why Trump is popular!
  • Miles on January 09 2016 said:
    Obama is an idiot.... You tanked Keystone, which would have employed thousands of US oil workers and now you want to give money for blood oil? WTF? Anyways, Trans Canada Pipelines is suing for $15 billion to recover costs and what would have been future revenues to help the US and Canada workers stayed employed. I liked him at first when he got in, but it's quite clear he is a lot more stupid than I thought!

    The Oil Sands is not "Dirty Oil". We have the most stringent environmental practices on earth. I guess we should start killing people and maybe have a civil war or two in order to get the North American O&G people working again... That way it's just blood oil and not dirty oil. LOL
  • Sabrina on January 08 2016 said:
    Three things for me anyway.

    One, will this actually help the average Tunisian?

    Two, while I like helping people, I'm tired of American tax dollars going to supposedly help people, while really just increasing the global 1%'s pocketbook.......

    Three and the most important, is this where we as Americans want our non-existant treasury spent? Would it not be better to create a loan w/ a legitimate, but low interest rate to provide solar?
  • SB on January 08 2016 said:
    Are you serious? We tanked Keystone, but the pet project is ok? What about all the environmental impact studies that must be completed? This is ridiculous. I truly hope this is not true and fact checking just failed this time.

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