Kenya Perseveres with Pipeline Plan to Serve East African Oil Boom

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--At a time when the oil production potential of East Africa is growing with the discovery of onshore and offshore oilfields, plans for a network of pipelines are crucial for exploitation and lucrative exports.

The fate of Kenya's oil refinery at the gateway port of Mombasa on the Indian Ocean is still not clear, after Indian co-owner Essar Energy plc (Port Louis, Mauritius) pulled out of a $1.2 billion upgrade project at the end of November 2013. But Kenya Petroleum Refineries and the government have been mulling future options, which include turning all or part of the run-down refinery into a storage facility and/or maintaining some refining capacity. Either way, Mombasa will continue to be a key port in the region's oil trade, both for exports and imports of petroleum products.

The pipeline will be designed with the capacity to meet a projected growth in demand through 2044 for petroleum products in Kenya and East Africa.

Full details on the total cost of the new project are not yet available, but the Kenya Pipeline Company said that the project would be financed through the company's internally generated funds, plus external loans.

The new pipeline could extend past the Kenyan town of Eldoret to Uganda's capital of Kampala, which is 350 kilometers away. Uganda, which is in the first stages of an oil production boom and is constructing a refinery, needs a reliable transport corridor to take product to the coast. The existing pipeline runs from Mombasa to Nairobi, and then continues onto Nakuru in the west before forking to Eldoret and Kisumu. Currently, much of the product from the Mombasa refinery is trucked to countries in the region. This is a slow process dogged by damaged roads and the breakdown of badly maintained trucks.

For related information, see June 28, 2013, article - Upgrade Planned for East Africa's Kenya Refinery and Pipeline Network, and December 18, 2013, article - Uganda Shortlists Six Companies for 60,000-Barrel Refinery Project.

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