The Lokichar-Lamu crude oil pipeline today took a significant step forward following the signing of a Joint Development Study Agreement (JDA) between the Government of Kenya and Tullow Oil, Africa Oil and Maersk Oil (KJV Partners), to carry out a study for the proposed 820 km crude oil pipeline.
The joint development agreement (JDA) which provides a legal framework on the pipeline development will be followed by studies on the pipeline’s technical requirements as well as its financing and ownership structure. It will allow important studies to commence such as Front End Engineering Design (FEED), Environmental and Social Impact Assessments (ESIA), as well as studies on pipeline financing and ownership. FEED, the engineering process that comes after the conceptual design or feasibility study, focuses on the technical requirements and approximate investment costs for a project.
Cabinet secretary in the ministry of energy and petroleum Charles Keter mentioned during the signing ceremony that the Front End Engineering Design (FEED) and the Environmental and Social Impact Assessments (ESIA) are two items which are very important and the tender should be out by next week. Keter added that Kenya cannot do without the two because it is a very costly project and it is standard just as any other pipeline in the world, in preparation of the tendering for the construction of the crude oil pipeline early next year.
“This is a milestone in the history of our country and it has come at the right time when we have seen an upward trend in the cost of crude oil from $43 to $55 a barrel. The Government of Kenya is committed to the development of a modern midstream infrastructure to evacuate Kenyan crude oil to the international markets and this agreement marks a significant milestone to realizing this goal. ”CS Charles Keter
The actual construction will depend on completion of FEED and ESIA which is likely to take less than a year.The pipeline – to run 820 km between Lokichar and Lamu on Kenya’s coast – would cost $2.1 billion and should be completed in the first quarter of 2021.
“The signing of this document provides a co-ordination between the Investors and the Government to make sure that the crude in Turkana find its way into the market by working very collaboratively with the Government and representatives of the community. It is the start of something important for the country in terms of moving forward in the Oil and Gas industry” said Martin Mbogo- Country Manager Tullow Oil.
He further stated that the Government has put in great resources to make sure the document is reflective of all parties. Tullow’s count of the Turkana oil reserves stands at 750 million barrels which is considered economically viable at the current prices of $55 a barrel.