NAIROBI: Kenya would be among the 10 cheapest countries to produce crude oil, ahead of major exporters like Nigeria and Angola. Tullow Oil, the UK firm prospecting for oil in Turkana among other areas, has reported the break-even point for Kenya crude is Sh2,550 ($25) per barrel – including the pipeline tariff to the sea port. Low production costs translate to higher profits for a producer. Kenya's projected cost is lower than $35.40 (Sh3,600) in Angola and Nigeria's $31.50 (Sh3,204), both countries bleeding money as global prices slumped to near-record low of $29 (Sh2,949) this week. At the prevailing prices, Kenya would still be making a profit if it were already producing and selling crude oil in the international markets.This is important news that suggests Kenya's oil is viable even at current low global prices albeit at a razor thin profit margin, said Eric Musau, a research analyst at Standard Investment Bank. He was quoting a presentation made by Tullow Oil after releasing its 2015 operating results. Being a low-cost crude oil producer could mean that Kenya can survive the sustained slump in prices, and still make a profit at the current levels.
Kenya and Uganda's presidents and oil company executives will meet on Monday to hold further discussions on a route for a pipeline to transport the two countries' oil, the Kenyan president's spokesman said on Sunday.
Resolving the pipeline route is crucial to helping oil companies involved in Uganda and Kenya to make final investment decisions on developing oil fields.
"President Uhuru Kenyatta will host Ugandan President Yoweri Museveni tomorrow ... They will discuss the construction of the Uganda-Kenya oil pipeline, a key plank of the Northern Corridor Infrastructure Projects," Manoah Esipisu said in a statement.
Last wee, Tanzania's presidency said that Total, which has a stake in Uganda's crude oil discoveries, had set aside $4 billion to build a pipeline from Ugandan fields to the Tanzanian coast and that Tanzania wants the three-year construction schedule shortened.
Resolving the pipeline route is vital in helping oil firms involved in Uganda and Kenya make a final investment decision on developing oil fields.The African Development Bank (AfDB) is ready to act as a lead arranger for financing of Kenya's planned oil pipeline to move crude from fields in the far north county of Turkana, a senior official of the bank said on Friday.Kenya and Uganda have been haggling over which route to choose for an oil export pipeline that Kenya wants to run through its territory rather than neighbouring Tanzania, where an alternate project backed by oil major Total, looks set to get the green light. Officials from both countries have been crisscrossing the region, visiting facilities along the proposed routes, and holding meetings with executives of oil firms in order to reach a final decision.Whatever comes out of this conversation, one thing is for sure - Kenya will build a pipeline, said Gabriel Negatu, the Nairobi-based regional director of the AfDB.He said South Sudan would probably link up with Kenya, just based on proximity, as both countries look to pipe its oil out to the world through the proposed port of Lamu, which formed part of a broader infrastructure development plan known as the Lamu Port Southern Sudan-Ethiopia Transport (LAPSSET) Corridor.
Africa Oil Corporation, the partner of Tullow Oil Plc in Kenya has received Sh43.6 billion ($427 million) from Maersk Oil & Gas of Denmark in exchange for half of its stake in three exploration blocks located in the Lokichar basin.
The deal brings in Maersk as a partner in blocks 10BB, 13T and 10BA where it will own 25 per cent interest, scaling down Africa Oil’s stake to 25 per cent while Tullow retains a 50 per cent interest in the blocks.
The farm-out arrangement was approved by Kenyan authorities last month but both companies had not reached a financial settlement.