AfDB seeks investment in Kenya's upstream oil sector

African Development Bank (AfDB) is eyeing opportunities in Kenya’s oil sector as the country edges towards exploitation of petroleum reserves discovered in the Turkana basin.

Regional director for eastern Africa Gabriel Negatu Thursday said that the lender was keen on upcoming grand projects such as the building of new refinery and fuel pipeline under the Lamu Port and Lamu-South Sudan Ethiopia Transport Corridor (Lapsset) project.

“We are very much interested in the oil industry and we shall have discussions on what role we can play to support the projects,” he told journalists in Nairobi.

Kenya did not have known commercial reserves of petroleum until March 2012 when Britain’s Tullow Oil discovered oil in Ngamia-1 well at Lokichar in Turkana County.

By last month, Tullow had drilled seven more exploration wells at Etuko-1, Twiga-1, Ekales-1, Paipai-1, Amosing-1, Agete-1, Awoi-1. Six of them had oil.

Infrastructure

Tullow has since doubled its estimate of discoveries to 600 million barrels in the Lokichar basin, following its latest discovery. The focus now turns to development of infrastructure such as an evacuation pipeline and a refinery.

Kenya is keen on developing the oil in Turkana under the Lapsset project entails building of a new seaport at Manda as well as standard gauge railway lines from Lamu to South Sudan with branches to Nairobi and Ethiopia from a hub in Isiolo.

“We hope to participate in the projects through the private sector either as financiers or lead arrangers for funding,” Mr Negatu said.

The Lapsset project will also involve the construction of a highway from Lamu to Isiolo with an extension to Nadapal/Nakodok in South Sudan and another link to Addis Ababa through Moyale.

The government further plans to include an oil refinery in the project even though there have been debates whether to build it in Lamu or Isiolo, which lies near the oil fields near Turkana.

Under Lapsset it was proposed that a refinery be built in Lamu so that even if South Sudan failed to use the pipeline and Kenya failed to find oil, Kenya would still import crude and have it refined in Lamu, a consultant involved in the project recently said on condition of anonymity.

By Allan Odhiambo