Page 5 - AfrOil Week 36 2019

AfrOil COMMENTARY AfrOil
In late July, the East African reported that prob-  lems with land acquisition and compensation had forced Kenya to revise its timeline for begin-
ning large-scale crude oil exports.
Specifically, it reported that Nairobi had not
moved ahead with land compensation. Kenyan authorities have not yet gazetted the acreage that will be used for upstream development, it said, or conducted surveys of the land along the pro- posed pipeline route.
Repeated delays
These problems have exacerbated the effect of delays stemming from other causes, such as the fact that Kenya’s National Environmental Man- agement Agency (NEMA) does not expect to receive a completed environmental and social impact (ESIA) study by the end of 2019. They have also led Nairobi to push back the date for
starting construction on the pipeline.
The Kenyan government had hoped to see a final investment decision (FID) on the Lokich- ar-Lamu pipeline made by the end of this year, followed by the beginning of production in 2022. But the target date for FID on the project has now been pushed back to mid-2020, and this means that oil cannot begin flowing before 2023. These developments do not really give Uganda any reason to start working with Kenya again. Instead, they suggest that co-operation would inevitably lead to new discussions of the same old problems, without any guarantee of a solution – and without giving Uganda any compelling new reasons to resolve its upstream problem. In turn, without an answer to ques- tions about how to proceed with upstream development, Uganda will not have much need
for an export pipeline anyway.™
Fuels in focus in East Africa
Developments across the region illustrate sensitivity to fuel supply issues where mid- and downstream facilities are lacking
WHAT:
A lack of pipeline
and refinery access has led East African states to employ novel means of sourcing fuel, while others remain precariously balanced between subsidies and fuel marketers.
WHY:
The region is significantly lacking in downstream capacity, and pipeline and trucking links to coastal import terminals are relied upon for fuel.
WHAT NEXT:
The completion of a refinery in Uganda is probably several years away and despite reports, Mozambique is not likely to build one.
NEWS from throughout East Africa last week has illustrated the delicate situation the region finds itself with regard to the security of fuel supply, and host governments are keen to improve interconnectivity in the absence of local refineries.
A 60,000 barrel per day (bpd) facility is being built by the Albertine Graben Refinery Consor- tium (AGRC) at Hoima in Uganda to process crude oil produced from the country’s Lake Albert fields.
However, a final investment decision (FID) is not anticipated until mid-2020 after France’s Total and China National Offshore Oil Corp. (CNOOC) delayed decisions on the upstream Tilenga and Kingfisher projects respectively, as well as the East Africa Crude Oil Pipeline (EACOP), the heated conduit that will take the waxy crude to the Tanzanian port of Tanga. The region’s only refinery was the Kenya Petro- leum Refineries Ltd (KPRL) facility at Changa- mwe, Mombasa, which was transformed into a storage terminal in 2014 after ceasing refining operations.
Short-term solution
With a lengthy wait before Uganda can start refining its own crude, efforts have been made to facilitate cheaper and more efficient fuel imports.
This week, the firm developing a fuel stor- age and transport system in Uganda said that the project was around 70% complete ahead of operational start-up next year.
The facility, which is referred to as the Entebbe Jetty, is being built in Bugiri-Bukasa on the outskirts of Kampala and on the banks
of Lake Victoria.
It will allow for fuel to be transported by
barge across the lake from Kenya’s port of Kisumu rather than by truck, so reducing the “cost of fuel and its transportation by over 50%”, according to Captain Mike Mukula, chairman of engineering, procurement and construction (EPC) contractor Mahathi Infra Uganda.
Mukula told local press that the tanks were complete, while the jetties and ships were near- ing completion. He added that the journey from Kisumu to Bugiri-Bukasa was estimated to take 16 hours.
Once complete, the facility’s 14 tanks will have a fuel storage capacity of 70mn litres of gasoline, diesel, jet A-1 and kerosene.
The tie-up will ease traffic on the congested border crossing and will make use of the Kisumu Oil Jetty (KOJ), owned by Kenya Pipeline Co. (KPC).
The project was unveiled in March, when KPC’s acting managing director Hudson Andambi said: “We plan to use KOJ to export oil to our neighbours. The jetty is technically sound and we are now consulting with Uganda on how the two jetties will be operated in harmony.”
He added that dry testing of KOJ had been completed during the construction phase and a test run of facility would be carried out once a vessel for ferrying fuel had been made available by Mahathi.
In May 2017, KPC awarded a $170mn deal to Southern Engineering Co. (SECO) to construct the KOJ to facilitate export of fuel to Uganda and northern Tanzania, a deal which has since come under intense scrutiny along with several other KPC projects.
“
Host go
vernments are keen
to improve interconnectivity in the absence of local refineries
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