Page 6 - AfrOil Week 20 2021

AfrOil COMMENTARY AfrOil

The first of these consists of three berths where per day (bpd) facility at a cost of $2.8bn. Author-
completion has reached 100%, 95% and 70% ities have since ruled out building a new refin-
WHAT: respectively, according to Kenya’s Treasury and ery on the grounds that such project would be
Lamu Port comes into National Planning Cabinet Secretary, Ukur uneconomic at a capacity of less than 400,000
operation this week as Yatani. The first phase is expected to come bpd, but recent public statements by govern-
part of Kenya’s massive in at a total cost of around $367mn, which is ment-affiliated companies have made passing
LAPSSET infrastructure being funded by the state, with the remaining reference to a refinery at Lamu without provid-
project.
29 anticipated to be funded, at least in part, by ing specifics.
WHY: the private sector. The Kenya Revenue Author- At any rate, the figures quoted appear ambi-
The facility is East ity (KRA) said last week that it had conducted a tious, with a 60,000 bpd facility being built at
Africa’s largest deep- dry run for cargo clearance in preparation for Hoima by Uganda’s Lake Albert partners Total,
sea port and will seek Maersk Shipping. Tullow and China National Offshore Oil Corp.
to attract transhipment Meanwhile, acting managing director of (CNOOC). This is anticipated to cost around
business ahead of the Kenya Ports Authority (KPA) Rashid Salim $3.5-4bn.
completion of a new road, said this week that the port is ready for major Kenya has already suffered a significant
rail and pipeline network shipping operations. “The new port has a huge refining setback in recent years, with the for-
linking it to Ethiopia and potential for business since it sits right in the mer 35,000 bpd Kenya Petroleum Refineries
South Sudan. middle of major shipping routes for global Ltd (KPRL) facility at Changamwe near Mom-
trade,” he told China’s Xinhua. basa closing in late 2013, only to act as a stor-
WHAT NEXT: The first vessel to visit the new port is age facility for crude oil produced under the
An oil pipeline will Maersk’s Singapore-flagged Cap-Carmel, which Early Oil Pilot Scheme (EOPS) at the country’s
transport crude to the Kenya Ports Authority (KPA) said would be able South Lokichar oilfields, which was halted in The Kenyan
port from Kenya’s South
Lokichar basin for to load and offload cargo without the use of har- mid-2020. government
onward export. bour cranes. Meanwhile, the Kenyan government antic-
KPA’s Captain Geoffrey Namadoa said: ipates completing land acquisition for the anticipates
“According to manifest, we expect to handle 100 Lokichar-Lamu Crude Oil Pipeline (LLCOP)
containers on the first day in Lamu Port, which by the end of the year. This involves acquiring completing land
will be used to test local road connectivity, which a 500-metre-wide corridor of land running 892
is already complete. Lamu Port is strategically km through the counties of Turkana, Samburu, acquisition for
geographically positioned and it will give com- Garissa, Isiolo, Meru and Lamu. the LLCOP
petition to already developed ports such as The cost of building the conduit, which will
Durban.” have an initial throughput capacity of 60,000- project by the
The Danish shipping giant’s MV Seago 80,000 bpd, is projected to reach $1.2bn.
Bremerhaven is also expected to call at Lamu According to LLCOP’s director-general Maina end of the year
during its first week of operations. Kiondo, a geotechnical study of the right-of-way
Once complete, Lamu Port will have 32 along the proposed route has been completed,
berths, offering the region’s highest rates of as have initial preliminary studies and front-end
transhipment. The berths will each have a 400- engineering and design (FEED) work.
metre quay and a depth of 17.5-18 metres, with However, even if land is acquired by the end
the berths covering 6 km of coastline. of the year, completion of construction is now
With the first three berths capable of han- estimated, perhaps optimistically, in the second
dling 1.2mn twenty-foot equivalent units (TEU) half of 2023, and concerns have already been
per year, the port will have an eventual capacity expressed about Lamu’s potential to become a
of 20mn TEU when fully complete. white elephant.
In 2019, Salim’s predecessor at the KPA, Dr
Daniel Manduku, said that the first berth would Transhipment
“be used as a multi- purpose berth and will be Speaking to Maritime Executive in April,
capable of handling any kind of vessels, espe- Wycliffe Wanda, the executive officer of the
cially the self-sustaining vessels.” He added: Kenya International Freight and Warehousing
“KPA has put in place plans to install three ship- Association, said: “I don’t know who is going to
to-shore (STS) gantries by the time the remain- use it come June. Factors against its viability are
ing two berths are ready for operation.” many and unless Kenya negotiates with Ethio-
pia, the facility will not achieve its purpose.”
Corridor The port will come into direct competition
In addition to the port, the LAPSSET transport with Mombasa down the coast, which may
and telecommunications corridor includes affect Nairobi’s ability to repay debts to Chinese
more than 2,500 km of roadways, a railway lenders that funded Kenya’s standard gauge
line, crude and petroleum product pipelines, a railway (SGR), while around 40% of Mombasa
fibre-optic cable internet service and other facil- port’s cargo is transported inland by rail.
ities. In April, CCCC was awarded a $166mn Meanwhile, Ethiopia, which was expected to
contract in April by the Kenya National High- provide a large chunk of Lamu and LAPSSET’s
way Authority to develop two roads. transhipment business, appears to have had its
There had also been talk of building an head turned. Earlier this month, the country’s
oil refinery either at Isiolo in the centre of the Ministry of Transport signed a $1bn deal with
country or at Lamu, with the LAPSSET Corri- DP World to create a trade and logistics cor-
dor Development Authority (LCDA) in January ridor from Ethiopia to the port of Berbera in
2019 talking of plans to build a 125,000 barrel Somaliland.

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