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Kenya has stored 70,000 barrels of oil in the north of the country, waiting to be trucked to the Mombasa port for pilot exports, but revenue sharing talks are still ongoing and currently impeding the start of the so-called Early Oil Pilot Scheme (EOPS) until a pipeline is built to ship commercial quantities of oil to the coast.
Although the 70,000 barrels of oil are stored, the pilot export project is being delayed because Kenya has yet to pass a bill regulating the oil revenue sharing between the federal government, the local governments, and the local communities where oil will be pumped.
Commercial quantities of crude oil in Kenya were discovered in 2012 in the South Lokichar Basin in the north. Tullow Oil, which discovered the resources, has continued its exploration and appraisal drilling campaigns in Kenya.
At the end of October 2017, Kenya’s government signed a Joint Development Study Agreement (JDA) with Tullow Oil, Africa Oil, and Maersk Oil for a proposed Lokichar-Lamu crude oil pipeline between the Turkana county and the Lamu port on the coast.
But until the pipeline allows for larger-scale commercial oil exports, Kenya has this early pilot scheme to test the export of small quantities.
“We are ready to pilot, we are just waiting for the Bill because the oil is already in the tanks,” local media quoted Principal Secretary Andrew Kamau as saying on Friday.
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The early pilot exports will be followed by commercial production and exports once the pipeline is completed in 2021, Kamau said.
Tullow Oil and its joint venture partners have proposed to the Government of Kenya that the Amosing and Ngamia fields should be developed as the Foundation Stage of the South Lokichar development. This stage would include a 60,000 to 80,000 bopd Central Processing Facility (CPF) and an export pipeline to Lamu.
In its trading update in late April, Tullow Oil said that “following the start of injection and production testing, oil produced is initially being stored until all necessary consents and approvals are granted for the transfer of crude oil to Mombasa by road. Discussions between local and national Government are on-going with expectations of being able to commence the trucking of oil in the coming months.”
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.