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Kenya Starts Its First-Ever Crude Oil Exports

Kenya oil terminal

Kenya sent on Sunday the first trucks transporting crude oil from the oil-rich but landlocked northern region of Turkana to the port of Mombassa, for the country’s first oil exports as part of a pilot export scheme.

As early as in the middle of May, Kenya had 70,000 barrels of oil stored in Turkana, waiting to be trucked to the Mombasa port for pilot exports, but revenue sharing talks were still ongoing and 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.

A week later, the Kenyan government and local lawmakers from the Turkana region reached an agreement on the distribution of oil revenues. Under the oil revenue sharing bill, 75 percent of revenue from oil production and exports will go to the government, 20 percent will go to the county government of Turkana, and 5 percent to the local community.

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.

Related: Don’t Take Higher Oil Prices For Granted

But until the pipeline allows for larger-scale commercial oil exports, Kenya has this early pilot scheme to test the export of small quantities.

Under the Early Oil Pilot Scheme, 2,000 bpd will be transported to Mombasa by road for eventual shipment, the Kenyan Presidency said in a statement on Sunday.

Kenya will look to avoid the “resource curse” of so many other African nations, Kenya’s President Uhuru Kenyatta said, adding that he hoped that oil would become a major contributor to the country’s economy.

By Tsvetana Paraskova for Oilprice.com

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