The Lokichar Lamu Crude Oil Pipeline roars back to life after all underlying issues solved

MK254

JF-Expert Member
May 11, 2013
31,744
48,385
Kenya's Crude Pipeline Project has roared back to life with new timelines set for the completion of the Ksh121 billion line.

Referred to as the Lokichar Lamu Crude Oil Pipeline (LLCOP), the proposed pipeline will stretch 892 kilometres connecting the Lokichar oil fields in northern Kenya to the Lamu seaport in the south.

It is expected to transverse Turkana, Samburu, Isiolo, Meru, Garissa, and Lamu counties.

Following years of delays, the project finally seems to be making progress after the National Environmental Management Authority (NEMA) put out an invite for public participation on the project on March 9, 2021.

Oil exploration in northern Kenya

Oil exploration in northern Kenya
FILE
The crude oil pipeline is among the key investments that are expected to complement the Lamu Port South Sudan Ethiopia (Lappset) project and open up the northern half of Kenya, starting in Lamu and running all the way to the border with South Sudan at Nakodok with artery branches to Moyale from Garissa.

The project has, however, faced major delays, in addition to the perennial challenges that the partners have faced and forced them to push forward the deadline for the Final Investment Decision in 2020.

Surveying of the pipeline's route began in July 2019 but it encountered delays in land acquisition and permitting which slowed down the progress of the project.

In June 2020, the project faced a hurdle when the Kenya Defence Forces (KDF) demanded a redesign of the pipeline stating that it was encroaching on its lands.

Responding to the concerns, the project partners made a revision to the pipeline route following a meeting between KDF and the Lapsset Corridor Development Authority (LCDA).

"The pipeline route realignment in Garissa county deviates from the original line… the new pipeline alignment moves approximately three kilometres to the North of the original route and results in the shortening of the overall pipeline length by approximately one kilometre," an addendum to the crude oil pipeline ESIA read in part.

The representation of the pipeline route from Lamu to Lokichar

The representation of the pipeline route from Lamu to Lokichar
TWITTER
It was expected to be completed in June 2022 but that was later revised to the second half of 2023.

The pipeline project is under a joint partnership between the Kenya government and the oil companies’ consortium of Tullow Oil Kenya B.V, Africa Oil Turkana Ltd and Total Oil (formally Maersk Oil).

According to the original plans, the pipeline was expected to be 18 inches with a capacity of 65,000 barrels per day, expandable to 80,000 barrels.

A truck of the first crude oil consignment from Lokichar, Turkana arrives at Mombasa's Changamwe KPRL storage facility on June 7, 2018.

A truck of the first crude oil consignment from Lokichar, Turkana arrives at Mombasa's Changamwe KPRL storage facility on June 7, 2018.
 

Tullow troubles puncture Kenya's oil dream​

Friday, March 12, 2021
ro-pix.jpg

An oil rig worker at Ngamia 3 oil exploration site in Nakukulas Village, Turkana County, on July 13, 2014.
File | Nation Media Group

By Brian Ambani

Nation Media Group

Thank you for reading Nation.Africa​

You have 4 more articles this month. Check out our plans for unlimited access.
Show plans

Had everything gone according to plan, Kenya would be set to begin its commercial export of crude oil on a large scale next year, after success in export of a consignment in 2019, which was obtained from the pilot phase of the project.

Instead, yesterday, the firm announced that it is now shifting attention and over 90 per cent of its resources to West Africa, with Tullow Chief Executive Rahul Dhir saying the company will be channeling resources to projects it considers to be productive in a move to cut costs.

“After a year of significant change for Tullow, we are now executing a robust, cash generative business plan which is focused on our most productive assets,” said Mr Dhir.

Tullow Oil also once again watered down the value of its stake in the Kenyan oil project by Sh46.8 billion on low global oil prices, casting doubt over the project’s future.

The company has also reduced capital injections in Kenya, and has allocated Sh548 million for the project this year compared to Sh4.4 billion last year and Sh7.6 billion in 2018.

The Africa-focused oil explorer said that it is buying time to see if its efforts to drill oil in Kenya would still be worthwhile at low global oil prices as it assesses options on whether it will have to discard the project entirely.

Tullow has already disposed of its assets in Uganda to Total for Sh62 billion ($575 million), leaving Kenya as the only country the firm has an interest in outside of West Africa.

Tullow owns a 50 per cent stake in two blocks in the oil-rich South Lokichar basin, blocks 10BB and 13T, while French oil firm Total and Canadian-based Africa Oil equally hold the remaining stake.

Tullow and Total were reported to be looking for suitors to buy half of their stakes in the project early last year but failed to find a suitor.

The licences for the joint venture partners was extended by the government until December of this year.

Economist Churchill Ogutu says that when the valuation of an asset drops, firms owning the asset take their time to decide on what to do with the asset, but that the companies would be reluctant to dispose of the asset on the lower prices and instead wait for the value to level up.

“If they (Tullow) were to sell their stake in the project now, it would mean they would do so at lower prices due to the lower valuation. This means that if they want to bail out and fetch a good price for their assets, they might wait until oil prices recover to do so,” Mr Ogutu said.

Kenya had identified the South Lokichar basin as the anchor of the onshore oil drilling project, a region Tullow estimates to contain 560 million barrels in oil reserves with a capacity to produce up to 100,000 barrels per day.

The government aimed to use the Early Oil Pilot Scheme (EOPS) to collect technical data that would be used to formulate a Field Development Plan (FDP) and also debut Kenya’s oil to the international market.

The firms also aimed to get funding to build a crude oil processing facility in the area to process the find, build a Sh120 billion pipeline from Lokichar to Lamu and also acquire land and water access rights before they commit to the project.

Tullow, which is facing liquidity issues even as it records year-on-year losses and mounting debt, termed the pilot scheme a “success” at its end last year despite continually missing targets to make a final investment decision on the project which would secure the project’s future.

Tullow has placed blame over delay in committing to the project on government’s delay in gazetting land for the project, slow progress in giving it access to waters from Turkwell Dam and river and delays by the National Environment Management Agency (Nema) to approve the project's Environmental and Social Impact Assessment (ESIA) report.

“Tullow and its joint venture partners expect to complete a revised assessment of the project by the second quarter of 2021. In parallel, the joint venture partners are also working closely with the government of Kenya on securing approval of the Environmental and Social Impact Assessments and finalising the commercial framework for the project,” Tullow said in its results statement on Wednesday.

Tullow stopped trucking oil from Turkana to Mombasa in November 2019 citing damage of roads in the area by rain, but the process has not resumed since.

But the government is still optimistic on the project and plans to sell 1.2 million barrels of oil and drill 75 oil wells in Lokichar by 2023.

Treasury has allocated Sh270 million for oil exploration and distribution this year, while Sh253 million was given for the same last year.

Meanwhile, Sh200 million was used in 2019-2020 for preparatory works on the proposed Lokichar-Lamu crude oil pipeline, while Sh400 million was also allocated for the project this year.

Tullow sought compensation of Sh204 billion from the Ministry of Petroleum last year for exploration costs incurred on the project.



CC: Tony254
 
Kenya's Crude Pipeline Project has roared back to life with new timelines set for the completion of the Ksh121 billion line.

Referred to as the Lokichar Lamu Crude Oil Pipeline (LLCOP), the proposed pipeline will stretch 892 kilometres connecting the Lokichar oil fields in northern Kenya to the Lamu seaport in the south.

It is expected to transverse Turkana, Samburu, Isiolo, Meru, Garissa, and Lamu counties.

Following years of delays, the project finally seems to be making progress after the National Environmental Management Authority (NEMA) put out an invite for public participation on the project on March 9, 2021.

Oil exploration in northern Kenya

Oil exploration in northern Kenya
FILE
The crude oil pipeline is among the key investments that are expected to complement the Lamu Port South Sudan Ethiopia (Lappset) project and open up the northern half of Kenya, starting in Lamu and running all the way to the border with South Sudan at Nakodok with artery branches to Moyale from Garissa.

The project has, however, faced major delays, in addition to the perennial challenges that the partners have faced and forced them to push forward the deadline for the Final Investment Decision in 2020.

Surveying of the pipeline's route began in July 2019 but it encountered delays in land acquisition and permitting which slowed down the progress of the project.

In June 2020, the project faced a hurdle when the Kenya Defence Forces (KDF) demanded a redesign of the pipeline stating that it was encroaching on its lands.

Responding to the concerns, the project partners made a revision to the pipeline route following a meeting between KDF and the Lapsset Corridor Development Authority (LCDA).

"The pipeline route realignment in Garissa county deviates from the original line… the new pipeline alignment moves approximately three kilometres to the North of the original route and results in the shortening of the overall pipeline length by approximately one kilometre," an addendum to the crude oil pipeline ESIA read in part.

The representation of the pipeline route from Lamu to Lokichar

The representation of the pipeline route from Lamu to Lokichar
TWITTER
It was expected to be completed in June 2022 but that was later revised to the second half of 2023.

The pipeline project is under a joint partnership between the Kenya government and the oil companies’ consortium of Tullow Oil Kenya B.V, Africa Oil Turkana Ltd and Total Oil (formally Maersk Oil).

According to the original plans, the pipeline was expected to be 18 inches with a capacity of 65,000 barrels per day, expandable to 80,000 barrels.

A truck of the first crude oil consignment from Lokichar, Turkana arrives at Mombasa's Changamwe KPRL storage facility on June 7, 2018.'s Changamwe KPRL storage facility on June 7, 2018.

A truck of the first crude oil consignment from Lokichar, Turkana arrives at Mombasa's Changamwe KPRL storage facility on June 7, 2018.
A hell of a consolation Bullshit
 

Tullow troubles puncture Kenya's oil dream​

Friday, March 12, 2021
ro-pix.jpg

An oil rig worker at Ngamia 3 oil exploration site in Nakukulas Village, Turkana County, on July 13, 2014.
File | Nation Media Group

By Brian Ambani

Nation Media Group

Thank you for reading Nation.Africa​

You have 4 more articles this month. Check out our plans for unlimited access.
Show plans

Had everything gone according to plan, Kenya would be set to begin its commercial export of crude oil on a large scale next year, after success in export of a consignment in 2019, which was obtained from the pilot phase of the project.

Instead, yesterday, the firm announced that it is now shifting attention and over 90 per cent of its resources to West Africa, with Tullow Chief Executive Rahul Dhir saying the company will be channeling resources to projects it considers to be productive in a move to cut costs.

“After a year of significant change for Tullow, we are now executing a robust, cash generative business plan which is focused on our most productive assets,” said Mr Dhir.

Tullow Oil also once again watered down the value of its stake in the Kenyan oil project by Sh46.8 billion on low global oil prices, casting doubt over the project’s future.

The company has also reduced capital injections in Kenya, and has allocated Sh548 million for the project this year compared to Sh4.4 billion last year and Sh7.6 billion in 2018.

The Africa-focused oil explorer said that it is buying time to see if its efforts to drill oil in Kenya would still be worthwhile at low global oil prices as it assesses options on whether it will have to discard the project entirely.

Tullow has already disposed of its assets in Uganda to Total for Sh62 billion ($575 million), leaving Kenya as the only country the firm has an interest in outside of West Africa.

Tullow owns a 50 per cent stake in two blocks in the oil-rich South Lokichar basin, blocks 10BB and 13T, while French oil firm Total and Canadian-based Africa Oil equally hold the remaining stake.

Tullow and Total were reported to be looking for suitors to buy half of their stakes in the project early last year but failed to find a suitor.

The licences for the joint venture partners was extended by the government until December of this year.

Economist Churchill Ogutu says that when the valuation of an asset drops, firms owning the asset take their time to decide on what to do with the asset, but that the companies would be reluctant to dispose of the asset on the lower prices and instead wait for the value to level up.

“If they (Tullow) were to sell their stake in the project now, it would mean they would do so at lower prices due to the lower valuation. This means that if they want to bail out and fetch a good price for their assets, they might wait until oil prices recover to do so,” Mr Ogutu said.

Kenya had identified the South Lokichar basin as the anchor of the onshore oil drilling project, a region Tullow estimates to contain 560 million barrels in oil reserves with a capacity to produce up to 100,000 barrels per day.

The government aimed to use the Early Oil Pilot Scheme (EOPS) to collect technical data that would be used to formulate a Field Development Plan (FDP) and also debut Kenya’s oil to the international market.

The firms also aimed to get funding to build a crude oil processing facility in the area to process the find, build a Sh120 billion pipeline from Lokichar to Lamu and also acquire land and water access rights before they commit to the project.

Tullow, which is facing liquidity issues even as it records year-on-year losses and mounting debt, termed the pilot scheme a “success” at its end last year despite continually missing targets to make a final investment decision on the project which would secure the project’s future.

Tullow has placed blame over delay in committing to the project on government’s delay in gazetting land for the project, slow progress in giving it access to waters from Turkwell Dam and river and delays by the National Environment Management Agency (Nema) to approve the project's Environmental and Social Impact Assessment (ESIA) report.

“Tullow and its joint venture partners expect to complete a revised assessment of the project by the second quarter of 2021. In parallel, the joint venture partners are also working closely with the government of Kenya on securing approval of the Environmental and Social Impact Assessments and finalising the commercial framework for the project,” Tullow said in its results statement on Wednesday.

Tullow stopped trucking oil from Turkana to Mombasa in November 2019 citing damage of roads in the area by rain, but the process has not resumed since.

But the government is still optimistic on the project and plans to sell 1.2 million barrels of oil and drill 75 oil wells in Lokichar by 2023.

Treasury has allocated Sh270 million for oil exploration and distribution this year, while Sh253 million was given for the same last year.

Meanwhile, Sh200 million was used in 2019-2020 for preparatory works on the proposed Lokichar-Lamu crude oil pipeline, while Sh400 million was also allocated for the project this year.

Tullow sought compensation of Sh204 billion from the Ministry of Petroleum last year for exploration costs incurred on the project.



CC: Tony254
Kenya is going to drill and refine it's own oil using local expertise ..plans are already underway watch this space.
 
Kenya is going to drill and refine it's own oil using local expertise ..plans are already underway watch this space.
I agree with you. I have always favoured a local refinery option rather than exporting crude oil. We can easily build a small refinery for our local needs so that we stop wasting US dollars importing refined oil.
 
I agree with you. I have always favoured a local refinery option rather than exporting crude oil. We can easily build a small refinery for our local needs so that we stop wasting US dollars importing refined oil.
Hahahaha, Kenya can't complete the most important Galana kulalu project, how can you dream very complex and less important project like oil refinery?.

One thing you must accept is that, Kenya doesn't have oil to talk about pipe or refinery, it is too little to think any viable investment.
 
Hahahaha, Kenya can't complete the most important Galana kulalu project, how can you dream very complex and less important project like oil refinery?.

One thing you must accept is that, Kenya doesn't have oil to talk about pipe or refinery, it is too little to think any viable investment.
The oil that we have is more than enough for our domestic use. We can refine and use that oil for atleast 50 years as long as we use it internally and don't export any of it. Unasema ati 700 million barrels ni kidogo? Utakuwa una matatizo fulani ya akili. Nyinyi mna barrels ngapi za proven oil reserve? Wacha wivu bana.
 
The oil that we have is more than enough for our domestic use. We can refine and use that oil for atleast 50 years as long as we use it internally and don't export any of it. Unasema ati 700 million barrels ni kidogo? Utakuwa una matatizo fulani ya akili. Nyinyi mna barrels ngapi za proen oil reserve? Wacha wivu bana.
That is not how the oil industry works, Kenya is only entitled to the production share after all expenses for mining, exploration and transportation are deducted, that is about half of the 700m(300m) barrels either as cash or crude..A pittance to say the least
 
That is not how the oil industry works, Kenya is only entitled to the production share after all expenses for mining, exploration and transportation are deducted, that is about half of the 700m(300m) barrels either as cash or crude..A pittance to say the least
So now all of a sudden a goat herder like you has become an oil expert? Spare me the BS
 
Back
Top Bottom