Government Expecting to Generate Ksh 8 Billion from Oil Exports by 2020

The Government of Kenya has announced that it expects to generate up to 8 billion shillings in revenue from oil exports by the end of next year.

The Early Oil Pilot Scheme (which is run by Tullow Oils and the Government) has proven to be fruitful as the duo plan to have seven shipments of at least 200,000 oil barrels that will run until next year.

In its announcement, the Government said that it will later decide on whether to transport 400,000 barrels per trip or even 500,000 barrels to enhance the faster shipment of the cargo.

According to the Petroleum Cabinet Secretary Andrew Kamau, the Government is planning on doing larger shipments rather than doing smaller shipments to see what kind of value it can get on shipping.

A Chinese company known as ChemChina is expected to buy the first Cargo after it emerged the highest bidder against other seven companies from Asia and Europe bidding at 1.2 billion shillings.

The PS said that even though they secured a bidder, the bids were made at a discount which resulted in a loss of 360.5 shillings compared to the one made to Brent Crude Company back in July.

“When the crude is new, refineries will take it at a discount and sometimes that can be as much as $10 (1,030 shillings). The bids that we got were at a discount between 3.50 dollars (360.5 shillings) and 6 dollars (618 shillings) compared to Brent, which is an indication of what the market feels is the value for our crude oil for a small cargo,” he said.

The Government had earlier stated that the first shipment would be used to taste the waters and know the types of challenges the oil project might face when it enters the commercial phase.

The Early Oil Pilot Scheme which is set to run until late next year is expected to generate about 6,180 shillings per barrel estimated at 8. 4 billion shillings in total for the whole period.

The Government said that the money will be used to cover the cost incurred during the implementation of the EOPS project, including compensation of the local Turkana residents.

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