Turkana oil production to be through project financing, Muriuki

Business & Finance Editor's Pick Nairobi News Security Technology

Kenya  will seek to market to global financiers as a way of ensuring project financing for development of  its Turkana petroleum deposits as the government no longer offers sovereign guarantees.

According to Shell Kenya Country Manager, Brian  Muriuki, 70 per cent of the project is expected to be financed through debts from international markets and 30 per cent through equity financing.

Kenya’s Turkana oil reserves, discovered in 2012, are estimated at 560mn barrels with Tullow owning a 50 per cent stake in the project, while  its partners, Canada’s Africa Oil Corp and Total, each hold 25pc.

Already, over $2 billion has been invested in the project with a 1350 ha required for the midstream and another 2000 ha required for the upstream so as to build the 824 km pipelines.

During a presentation held in Nairobi on Tuesday, Muriuki said that the pipeline would be financed through project financing obtained from lending banks as well as equity capital from tariffs income.

In  June, Kenya also signed the heads of terms agreement with Tullow, Total and Africa Oil, the joint venture partners involved in development of the Turkana oilfields, laying out the obligations of each party and investments required for commercial production.

The first shipment of 250,000 barrels of early oil exports also happened in August, as Nairobi sought to test the appetite for its crude deposits on the international markets.

More than 500,000 barrels are anticipated to be produced by February next year with Kenya expected to do project financing on the strength of product profile.

The revenue sharing agreement between Kenya and the oil companies has not been disclosed publicly with Muriuki stating that it was still a process which was yet to be finalized with Turkana community leaders reported to be wanting 50 per cent of Kenya’s oil revenues, plus a monthly stipend for each family affected by the oil operations.

Building the pipeline and the oil facilities would take approximately 36 months, says Muriuki with production likely start in 2023.

By  Alice  Gworo

Leave a Reply