Petroleum Industry In Kenya

When was it discovered and controls it who controls it?

The petroleum industry in Kenya is relatively new in terms of mining and exploration. Oil was first discovered in 2012 by British firm

Tullow Oil. As to whether they are commercially viable is still being analyzed. Currently, the oil industry is controlled by importation and refining.

The Kenyan petroleum industry contributed an estimated 2.8% to GDP in 2016 with net domestic sales of petroleum products increased by 6.5% to 5,044.2 thousand tonnes. Currently, there is no local crude oil production and activity in the upstream industry is centered on exploration and the development of infrastructure to facilitate production.

A Net Importer: Although crude oil has not been imported since the Mombasa refinery that was owned by Kenya Petroleum Refineries Ltd (KPRL) was closed in 2013, all other refined petroleum products including petrol and diesel, kerosene, Liquefied Petroleum Gas (LPG) and paraffin wax are imported. However, the discovery of crude oil and the building of crude oil pipelines are expected to turn this situation around. The government envisages that by 2020/21 Kenya will produce 30,000 barrels of crude oil per day. This will then be available for the processing and local manufacture of products as well as for export.

Report Coverage: The report on the Kenyan Petroleum Industry focuses on the manufacture and wholesale trade of petroleum products from crude oil and natural gas as well as the manufacture of lubricating oils and greases, primarily from other organic products. Profiles for 25 companies are provided, including oil-importing and marketing companies such as international majors, Shell and Engen, as well as small enterprise Eco Fuels Kenya Ltd which produces 25,000 litres of biofuel per annum. Also profiled is Total Kenya which in 2017 received approval from the Competition Authority of Kenya to acquire the entire stake of Gulf African Petroleum Corporation (GAPCO), majority-owned by Indian billionaire Mukesh Ambani through Reliance Industries.

The transaction is estimated to be worth US$400m and means that Total’s share of the market could increase to as much as 38%, up from its current 20%.LONDON, Nov. 15, 2017 /PRNewswire/ — The Kenyan Petroleum Industry: The Kenyan petroleum industry contributed an estimated 2.8% to GDP in 2016 with net domestic sales of petroleum products increasing by 6.5% to 5,044.2 thousand tonnes. Currently, there is no local crude oil production and activity in the upstream industry is centered on exploration and the development of infrastructure to facilitate production.

A Net Importer: Although crude oil has not been imported since the Mombasa refinery that was owned by Kenya Petroleum Refineries Ltd (KPRL) was closed in 2013, all other refined petroleum products including petrol and diesel, kerosene, Liquefied Petroleum Gas (LPG) and paraffin wax are imported. However, the discovery of crude oil and the building of crude oil pipelines are expected to turn this situation around. The government envisages that by 2020/21 Kenya will produce 30,000 barrels of crude oil per day. This will then be available for the processing and local manufacture of products as well as for export.

Report Coverage: The report on the Kenyan Petroleum Industry focuses on the manufacture and wholesale trade of petroleum products from crude oil and natural gas as well as the manufacture of lubricating oils and greases, primarily from other organic products. Profiles for 25 companies are provided, including oil-importing and marketing companies such as international majors, Shell and Engen, as well as small enterprise Eco Fuels Kenya Ltd which produces 25,000 litres of biofuel per annum. Also profiled is Total Kenya which in 2017 received approval from the Competition Authority of Kenya to acquire the entire stake of Gulf African Petroleum Corporation (GAPCO), majority-owned by Indian billionaire Mukesh Ambani through Reliance Industries. The transaction is estimated to be worth US$400m and means that Total’s share of the market could increase to as much as 38%, up from its current 20%.

The history of oil marketing

The history of oil marketing in Kenya began in 1903 during colonial times. Initially, kerosene was the main import in tins but later gasoline was imported in tins and drums. Royal Dutch Shell established the first depot on the Mombasa island at Shimanzi. According to Deloitte in 2013, Kenya has four prospective sedimentary basins: Anza, Lamu, Mandera, and the Tertiary Rift. The Lamu basin extends offshore.

Oil is regulated by the Energy Regulation Commission and the Ministry of Mining. Current traders include the National Oil Corporation of Kenya, Shell, Tullow Oil, KenolKobil, MOGAS, Hass, Hashi Energy, Gulf Energy, Olympic, Dalbit Petroleum, Petrocam. In August 2019. Kenya exported its first crude oil from the port of Mombasa. This is an experimental stage to test the country’s crude oil before full production and exportation which will begin in 2024.

Oil in Turkana

Where is Turkana located in Kenya?

Turkana County is a county in the former Rift Valley Province of Kenya and is the second-largest, by land area, (after Marsabit County) and also the northwesternmost county in Kenya. It is bordered by the countries of Uganda to the west; South Sudan and Ethiopia, including the disputed Elemi Triangle, to the north and northeast; and Lake Turkana to the east. To the south and east, neighbouring counties in Kenya are West Pokot, Baringo, and Samburu Counties, while Marsabit County is located on the opposite (i.e. eastern) shore of Lake Turkana.

Tullow Oil PLC, a British-owned oil exploration company, has discovered an estimated 250 million barrels of crude oil beneath the arid surface. While resource extraction is not expected to begin for several years, the Turkana oil finds have been celebrated. Oil revenue is seen as a solution to poverty in the region, where nine out of ten people live at subsistence level.

But behind the optimistic rhetoric, the prevailing political and security environment in Turkana County is looking conspicuously similar to that which sparked insurgency in the Niger Delta. If left unaddressed, the region could potentially become a theatre for oil conflict. In addition, the environmental impacts, which could include a huge drop in Lake Turkana’s water level, could lead to a collapse of local livelihoods and foment insecurity in the already conflict-ridden Horn of Africa. The Lake Turkana area is regarded by many anthropologists as the cradle of humankind due to the abundance of hominid fossils.

Kenya exports first oil to the international market

President Kenyatta, who flagged off the export from the port of Mombasa said Kenya has now joined the league of oil-exporting nations.

“The first export of crude oil by our nation, therefore marks, a special moment in our history as a people and as a country,” he said, waving a Kenyan flag aboard a tanker at the Indian Ocean port of Mombasa that will be carrying the oil to Asia.

“There are special moments that mark a turning point in the destiny of our nation,” Kenyatta said at the ceremony. “The first export of crude oil by our nation, therefore, marks a special moment in our history as a people and as a country.”

Kenyatta said the first attempts at finding oil in Kenya date back to 1937 but it was not until 2012 that a commercially-viable deposit was located.

This field was discovered in the South Lokichar Basin in Turkana, in Kenya’s far north, by British firm Tullow and its joint venture partners.

The company estimates the field holds 560 million barrels of oil.

In early June 2018, the company began shipping crude from Turkana to Mombasa by road. It will eventually be shipped via a pipeline under construction.

Kenyatta said it “showed the global market that Kenya possesses the know-how and the infrastructure required to facilitate full- fired development”.

“This first oil pilot scheme has also brought with it prosperity for the people of Turkana but also the wider republic with very many local communities directly benefiting from employment opportunities in production and logistics,” he said.