Total strikes deal to build Kenya’s Lamu crude oil pipeline

French firm Total SA has committed to invest in the Lokichar-Lamu pipeline, boosting Kenya’s efforts to develop its own oil fields and realise its ambition of joining the league of oil exporters.
The deal was brokered in Nairobi on Tuesday during a meeting between President Uhuru Kenyatta and Total’s executive committee member and president for marketing and services Momar Nguer.

State House spokesperson Manoah Esipisu said the French firm has been cleared to buy shares in Maersk Oil blocks in Kenya after it committed to developing the Lokichar to Lamu oil pipeline as the only evacuation route for Kenya’s crude oil.

“Following Total SA’s commitment, the government has consented to a proposed acquisition of the issued and to-be-issued share capital of Maersk Oil Exploration International (Mogas Kenya) in respect of Blocks 10BA, 10BB and 13T,” said Mr Esipisu.

The deal represents an about-turn almost two years after Total ditched the Kenyan route in favour of the Uganda-Tanzania option for evacuation of crude oil from East Africa’s oil fields.

It also presents the East African region with the prospect of having two crude oil pipelines, one running from Kenya’s Turkana oil fields to Lamu Port and the other from Western Uganda to Tanzania.

Uganda and Kenya are the only countries with crude oil in the region. Uganda’s proven recoverable reserves are estimated at two billion barrels while Kenya’s is at 750 million barrels.

“Kenya is optimistic that the entry of Total into the Joint Venture will strengthen the financial resources and technical competence that is required to accelerate the development of the resources in these blocks,” said Mr Esipisu.

“President Kenyatta said his administration would accord support to Mogas Kenya and Total SA, and indeed other private sector players that are keen to develop the country’s resources with the goal of delivering shared prosperity,” he said.

In early 2016, Total opted for the Uganda- Tanzania route after it expressed concern over the security of the infrastructure running through the ‘wild’ North and North Eastern Kenya.

Total was reportedly influenced by a security report compiled by an unnamed non-governmental organisation.

The report is said to have warned of high risk of attacks by Al shabaab terrorists within the Kenyan territory, prompting Total to opt out.

Faced with the prospect of an endless wait, Uganda later decided to build its crude oil pipeline through Tanzania’s Tanga port, leaving Kenya to its own devices.

Uganda and Tanzania launched construction of the 1,445-kilometre crude oil pipeline last year with Total as one of the three participating private firms.

Officials estimate that the $3.35 billion project could be ready by end of next year.

Kenya, has on the other hand been toying with a short term plan to have its Turkana crude oil transported by trucks and standard gauge railway to Changamwe jetty before shipping to international markets.

Kenya had initially set itself an ambitious target of getting its crude to the international market before August 8, 2017 General Election but later postponed the plan indefinitely over logistical challenges.

Source: Business Daily

Subscribe to our Newsletter

Receive regular updates from Kenya Investment Authority.

How can we help?

We are always ready to help

Contact Us