Kenya's Refinery Plans Expansion to 88,000 Barrels Per Day

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Kenya Petroleum Refineries Limited's (KPRL) board is due to meet to approve a $1.2 billion refinery upgrade and engineering re-design for its plant at Mombasa, on the Indian Ocean coast. The aim is to enhance the plant's crude oil refining capacity and enable it to handle more complex operations. The project will be scheduled for completion over a three-year period. The improved operational efficiency will allow the refinery to blend crude oil from cheaper sources to produce high-grade refined oil.

"When the board approves the new engineering design, we will begin to arrange funds," said KPRL CEO Brij Mohan Bansai. "This process could take up to 12 months, including the award of the tender before the start of the upgrade." The refinery plans to identify a banker or a fundraiser for the project. A mix of financing models is under consideration. When the process is complete, KPRL expects foreign lenders to enable the project to begin.

The KPRL facility refines 40% of Kenya's processed oil products. A 9.2-megawatt (MW) power plant running on fuel oil will help to solve the problem of power interruptions, which lead to system failures and equipment short-circuits. The $17 million power plant is now undergoing a pre-launch run to prepare for an official opening in November. Any power produced that exceeds the refineries' requirements will be sold to other oil industry users.

New pump facilities are being installed to allow more refined oil to be pumped to the Kenya Pipeline Corporation (KPC) to improve efficiency in the oil industry, Bansai said.

The refinery is 50:50 owned by the Kenyan government and Essar Energy (OTC:ESSRF) (Mumbai, India). It recently shifted from operating as a toll refinery, raising its operational revenue by charging oil marketing firms for the cost of refining crude oil, to a merchant refinery, which owns the crude oil it refines. It is the largest refinery in East and Central Africa and currently has one of its two units idling to create more operational efficiency and cut production costs. When the expansion project is complete, capacity will have risen from the current 32,000 to 88,000 barrels per day.

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