Kenya first batch of crude oil to trade at $60 per barrel
Kenya’s commercial oil prospects have received a boost from the recent pricing of the first batch of crude oil at an optimal ($60) per barrel. Investors have from the purchase of the estimated 200,000 barrels of crude, warmed up to opportunities presented by the nearly 600 million barrels of oil reserves in Turkana as the pricing of the premier batch matches up to world leading crude classifications. “We did not have to yield to a heavy discount from the sale. Other countries who have pioneered early oil have unlike ourselves discounted their prices by nearly Ksh.1036 ($10) per barrel,” a source close to the transaction said. The appraisal of Kenya’s black gold at current market prices sits behind only the premium valued Brent Crude and well ahead of the medium ranked West Texas Intermediate (WTI). Both Brent and the WTI crude component benefited from the rebounding crude prices in the week to rise by 1.39 and 1.71 percent by close of trade on Friday to Ksh.6412 ($61.89) and Ksh.5766 ($55.66) respectively. Like Brent, the Turkana based Kenyan crude has been described as sweet and light, its light attribute describing its low relatively low density as the sweet sentiment underpins the crude’s low sulphur content. The significant transaction by the Kenyan government is expected to provide impetus to the State’s drive towards full commercial production ahead of the final investment decision (FID) by the British based exploration and production firm Tullow. Silence The Ministry of Petroleum and Mining has despite the good tidings held its grave silence on the details of the oil’s buyer(s), shrugging off the majority of media queries on Friday. Citizen Digital request for commentary on the first oil sale from the Petroleum State Department went largely unanswered. According to a senior petroleum consultant who requested for anonymity citing the sensitivity of the transaction, the State is effectively managing expectations, exercising moderation in a quest to avoid the jeopardizing of the FID. Sources indicate the stock of crude at the Kenya Petroleum Refinery storage at Changamwe in Mombasa at around 240,000 barrels even as more crude hits the facility under ongoing trucking by Tullow. The Ksh.1.2 billion transaction sits within the Early Oil Pilot Scheme (EOPS) whose goal is set at establishing the commercial value of the Turkana crude reserves. Proceeds from the transaction are expected to sit within the state coffers while it remains to be seen whether the established revenue sharing mechanism kicks in at this time. The government of Kenya through its Petroleum Ministry reached a deal with stakeholders in Turkana County on revenue share, keeping the majority 75 percent of earnings from any commercial exploits as the county and community scoop the remaining 20 and five percent respectively. According to Tullow’s quarter one update, the final investment decision awaits the development of the Lamu-Lokichar pipeline and upstream front end engineering design and the submission of an environmental and social impact assessment. Kenya seeks to output crude at a rate of 60,000-100000 barrels per day (bpd) upon full commercial development putting the life of the Turkana crude reserves at between 15 and 26 years.