Lokichar-Lamu pipeline plan awaits NEMA approval

The Front End Engineering Design (FEED) is already complete

In Summary

•The project that is expected to transport crude from the Lokichar oil fields, to Lamu port, is currently at the project development stage.

•The government is keen to expand upstream oil and gas output.

Tullow Oil equipment at Ngamia 1 site in Lokichar, Turkana/FILE
TULLOW OIL DRILLING: Tullow Oil equipment at Ngamia 1 site in Lokichar, Turkana/FILE

Plans to construction the much-needed 852 km Lokichar-Lamu pipeline for transporting crude oil from Turkana is taking shape, as Kenya’s dream of becoming a net exporter lives on.

The project that is expected to transport the processed crude from the central processing facility, at the Lokichar oil fields, to Lamu port, is currently at the project development stage, a report by the petroleum sector regulator indicates.

“The Front End Engineering Design (FEED) is already complete and the Environmental and Social Impact Assessment (ESIA) report submitted to NEMA for approval,” the Energy and Petroleum Regulatory Authority (EPRA) says in its Energy and Petroleum Statistic Report, released on Monday.

The government is also keen to have a way forward on the planned investment by lead player Tullow Oil and its partners, who have been seeking a strategic partner to fund the next stage of development.

Tullow and its partners had initially planned to reach a final investment decision in 2019, and first commercial production between 2022 and this year, a process that has delayed.

The Lokichar Oil fields in Turkana County will export 120,000 barrels of crude oil to the Lamu Port per day once the proposed pipeline is constructed, up from 2,000 barrels being transported by oil tankers nowadays.

The government has also been keen on more exploration activities in plans to expand Kenya’s upstream oil and gas operations, with activities led by the private sector.

Oil reserves in the Lokichar sub-basin are estimated at over 4 billion barrels with full production potential estimated at 100,000 barrels per day, by 2024.

However, reaching the full capacity will require investments in infrastructure including drilling and pipelines.

In 2021, there were thirteen (13) Hydro Carbon discoveries, with oil discoveries having been made in the Tertiary Rift Basin.

Additionally, gas discoveries were made in offshore Lamu Basin, Anza Basin (North Eastern Kenya) and Mbawa 1well ( 70 kms off the coast of Malindi), while Sunbird 1 well 9 (Lamu basin offshore) had both oil and gas discoveries.

Three blocks in Offshore Lamu Basin and Anza Basin have since been surrendered to the government.

Efforts are underway to introduce an Integrated Field Development Plan.

The plan will provide technical guidance and serve as a blueprint for optimizing the development and production of the fields, EPRA notes, including proposed development covering 10 fields within the South Lokichar basin (Turkana).

The field development in Turkana will be undertaken in two phases with phase one development targeting mature resources with a plateau of 120,000 barrels per day, while phase two targets maturing of the remaining six fields to extend the plateau.

The total land requirement for the upstream development area and the 84km water pipeline is approximately 22,000 acres and 614 acres, respectively.

The government has been working on land compensation for the affected communities.

It is however a wait and see on the direction that the plans to commercialise Kenya’s crude will take, as Tullow seeks to reduce its stake in the Turkana project.

The British exploration firm has been in talks with India’s ONGC Videsh and Indian Oil Corp hoping to offload its $3.4 billion (Sh420.6 billion) Lokichar oil project but this is yet to be concluded, as the firm reviews its costs and return-on investment.

“We are working with potential strategic partners to reduce our stake in the project to be more in line with a company of our size,” CEO Rahul Dhir notes in the firm’s recent financial update.

The Indian state-backed companies will be joint operators of the project, if a deal is reached, as Tullow moves to shed part of its 50 percent stake in the project.

Other partners are Africa Oil Corp. and TotalEnergies SE which both hold 25 percent each.

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