Falling world oil prices will not cause a major delay to plans to begin oil production in northwest Kenya, Africa Oil Corp’s chief executive said on Thursday.
Keith Hill said the biggest hurdle was finalising construction plans for a crude oil pipeline.
Africa Oil and its partners aim to announce a final investment decision for production in early 2017.
“The current oil price has indeed put pressure on the project, but we do not believe this low price is sustainable. We do not see a major delay to the project as a result of the oil price, our biggest issue is getting the pipeline finalised,” Hill said in an emailed response to questions from Reuters.
The pipeline will run from land-locked Uganda across northwest Kenya to a planned port in Lamu, on Kenya’s Indian Ocean coastline.
Kenya and Uganda agreed to the route in August but they are still working out details, including financing. Uganda has an estimated 6.5 billion barrels of crude oil reserves.
Companies active in Uganda include France’s Total, Britain’s Tullow Oil and China’s CNOOC .
Africa Oil and partner Tullow Oil first struck oil in Lokichar in northwest Kenya in 2012. The recoverable reserves are an estimated 600 million barrels of crude, which would feed into the pipeline from Uganda when it is built.
Africa Oil and Tullow were 50-50 partners in blocks 10 BB and 13T where the discoveries were made. Africa Oil has since sold a 25 per cent stake in those blocks to A.P. Moller-Maersk .
It has also sold a 25 per cent stake in Block 10 BA to A.P. Moller-Maersk.
Hill said Africa Oil was still actively exploring despite the low oil price.
On Thursday, crude oil futures hit their lowest levels since 2003, as investors worried over glut of crude at a time of slowing global demand, especially from China.
Oil prices have fallen over 75 per cent in 18 months.