Kenya cannot construct her own refinery for the Lokichar oil basin in Turkana, since it is “too little for economic viability”.
According to Andrew Kamau, principal secretary at the petroleum and mining ministry, the Lokichar basin can only produce an average of 80,000 barrels per day.
Tullow Oil estimates that Lokichar contains 560 million barrels of crude oil in proven and probable reserves. However, according to Kamau, a refinery would make money only when it has refining capacity of at least 400,000 barrels a day.
“And we have 80,000 barrels a day, so where are we going to make money on that? We can import cheaper from India,” said Kamau as quoted by Reuters.
The only refinery owned by Kenya was the Kenya Petroleum Refineries Ltd (KPRL) plant in Changamwe, Mombasa which halted operations in 2013 after plans for a $1.2 billion (Ksh120 billion) upgrade were abandoned on the advice of consultants who said it was not economically viable.
The government took it over in 2016 and converted it into a storage facility.
The facility was leased to the Kenya Pipeline Company (KPC) for three years, for purposes of storing crude oil from Lokichar before it is exported.
KPC chairman John Ngumi said they had spent Ksh200 million to modify tanks at KPRL to allow storage of Early Oil Pilot Scheme (EOPs) products.
“Going forward, we are banking on government policy upon expiry of the three-year lease period. We look forward to having KPC and KPRL become one entity,” he said.