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Kenya and South Sudan sign deals to increase trade
SOUTH SUDAN
FOLLOWING a meeting between presidents Uhuru Kenyatta and Salva Kiir in Nairobi, Kenya and South Sudan announced agreements to increase cross-border trade between the neighbours.
e deals centre around Kenya’s agreement to allocate land for a dry port to South Sudan at the Naivasha Special Economic Zone and for a logistics hub near the new port at Lamu.
Being landlocked, cross-border trade is par- ticularly important for South Sudan and the ra of deals also provide for improved rail and road connections, while Kenyatta has given assur- ances that Kenya would speed up work on the slow-moving Lamu Port-South Sudan-Ethiopia Transport (LAPSSET) corridor, which includes a major oil export pipeline.
LAPSSET also involves the Lamu coal and power project, which has just had its environ- mental licence revoked. (See previous story)
e two leaders also agreed to set up a joint commission to manage their shared border.
South Sudan is reliant on its northern neigh- bour Sudan to transport its crude to market, and relations between the two have rarely been stable since the south declared independence in 2011.
Juba is eager to nd means to monetise its crude reserves, the third largest in Africa, other than through exports via a pipeline through its former overlord Sudan. Production has fallen from a peak of 350,000 barrels per day (bpd) before independence in 2011 to around 170,000 bpd a er years of civil war and underinvestment.
Energy Minister Je Radebe signed an MoU in November 2018 with his South Sudanese counterpart Ezekiel Lol Gatkuoth pledging joint investment of $1bn by the CEF and Juba-owned Nile Petroleum Corp. in developing an undis- closed oil block and a 60,000 bpd re nery.
Given the young country’s parlous political and economic condition, there is some doubt that the project will proceed beyond the draw- ing board.
Meanwhile, Kenya’s own downstream sector has experienced di culties in recent years. Fol- lowing the mothballing of the facility in 2013, Principal Private Secretary at the Petroleum Ministry Andrew Kamau revealed in February that plans were under consideration to equip the Kenya Petroleum Re nery Ltd (KPRL) for bitu- men storage when the pilot project comes to an end, to add a new and pro table revenue stream.
e Changamwe-based unit had a capacity of 35,000 bpd and following conversion to stor- age, the facilities comprise 45 tanks with a total capacity of 484mn litres – including 254mn litres for re ned products and 233mn litres (1.47mn barrels) for crude oil.
Kamau also ruled out building a new re nery on the grounds that such project would be une- conomic at a capacity of less than 400,000 bpd. e rst phase of development at the country’s Lokichar oilfields calls for output of 60,000- 80,000 bpd.
e notion of Nairobi developing a new re n- ery has been barely mentioned in recent years, but a green eld facility at Lamu was originally planned as part of the slow-moving, ambitious LAPSSET project. Under the project, crude would be piped to Lamu for export.
Following the completion of the Nairo- bi-Mombasa fuel pipeline in June 2018, Kenya Pipeline Co. (KPC) stated its intention in July to begin studies by year-end on the planned line linking Lamu with Isiolo, to the north-west. is is a key stretch of the regional fuel pipeline network long envisaged as a core component of LAPPSET.™
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w w w . N E W S B A S E . c o m Week 26 03•July•2019