Tullow oil plans to start small scale oil exports from Kenya before end of the first half of 2019. At the moment, the company transports 600 oil barrels daily to Mombasa by road. Tullow expects that figure to triple to 2,000 oil barrels per day by April 2019. More than 60,000 oil barrels are stored in the Mombasa oil refinery waiting the inaugural shipping in early 2019.
The British oil explorer plans to invest an additional Ksh7 billion in Kenya; which represents 12 per cent of its total capital expenditure in 2019. The new investment will be used to develop oil wells in Turkana County. The heavy capital injection signifies the good returns Tullow oil expects from its investment in Turkana oil production.
In a statement on its website, Tullow said that it had “made substantial progress in Kenya in 2018”. The company also stated that it is in the final stages of formalising its agreement with the Kenyan government to start commercial oil production. Before commercial production begins, the company must sign a contract with the Kenyan government, acquire the land, and create commercial frameworks.
Full scale commercial production of oil is expected to start in 2022. The much awaited commercial production is expected to provide a boost to Kenya’s national income and lead to further diversification of the Kenyan economy. Additionally, income in US dollars from the international markets will prop up the Kenyan shilling.
The oil from Turkana wells is light crude and quite waxy. Although its waxy quality is a drawback, the oil’s unusually low sulphur content is an advantage. A new regulation by the International Marine Organization requires marine fuels to have 0.5 per cent sulphur content. As a result, Tullow predicts that the Kenyan oil is likely to fetch a premium in the international markets.
