Kenya’s New Oil Terminal Ready for Test Run
The terminal is expected to cut cost of petroleum products by reducing the cost of demurrage or the extra time taken to load and unload cargo, a big factor to the high cost of oil in the region.
Completion of the new Kipevu Oil Terminal in Mombasa will see Kenya double its capacity to handle transit petroleum products to Uganda, Rwanda and Burundi starting January 2022 from the current 35,000 tonnes.
The $385 million terminal can handle up to four vessels at a time compared with the old terminal that can handle only one.
The terminal is expected to cut cost of petroleum products by reducing the cost of demurrage or the extra time taken to load and unload cargo, a big factor to the high cost of oil in the region.
The Kenya Ports Authority (KPA), who will run the terminal, have scheduled a dry run test in December. The terminal can handle vessels with a dead weight tonnage of 200,000 and has a liquefied petroleum gas (LPG) line to stabilise gas supply in Kenya.
KPA says faster loading is expected to translate to lower prices for LPG.
According to Kenya Pipeline Company (KPC) the new facility will reduce cost of gas by 30 percent once operational.
The East African has established KPC is currently in talks with Kenya’s Ministry of Energy to put up a dedicated LPG storage facility with an initial capacity of 25,000 tones.
“The construction of the KOT (Kipevu Oil Terminal) to support the energy sector has made significant progress and upon completion by the end of this year, we shall have terminals consisting of four berths capable to berthing four vessels to benefit from economies of scale and reduce fee charged for waiting vessels,” said acting KPA managing director John Mwangemi.
The facility was built by the China Communications Construction Company to supplement the current 50-year-old Kipevu Oil Terminal.
The new terminal will have both subsea and land-based pipelines connecting it to the storage facilities in Kipevu, and the capacity to handle crude oil and heavy fuel oil as well as three types of white oil products — DPK-aviation fuel, AGO-Diesel and PMS-Petrol.
KPC is angling to take over operations at the new terminal and at Kenya Petroleum Refineries.
KPC infrastructure development general manager David Muriuki said; “We expect tender for the construction of storage facility is expected to be ready within three months whereas facility is set to be completed within three years.
The Kenya Pipeline Company (KPC) plans to conclude the take-over of the Kenya Petroleum Refineries Limited early next year.
KPRL Acting Managing Director Samson Soimo says stakeholder talks are underway to give the cash-strapped oil refiner a new lease of life.
KPRL was placed under the management of KPC in 2017 as a storage facility for imported crude oil after Indian investor Essar failed to revive the country’s only oil refinery.
Established more than 50 years ago, KPRL has 45 tanks with a total storage capacity of 484 million liters in Mombasa.
254 million liters is reserved for refined products while 233 million liters for crude oil.
KPC controls 144 million liters at the Changamwe facility.
In 2009, major players in the industry like Shell Petroleum Company, Chevron Global Energy, and BP Africa Limited boycotted the use of the facility on accounts of high operational costs.
The government advertised for a strategic investor, where Essar of India bought a 50% stake in the facility.
However, the Indian investor pulled out later leaving the government to operate the refinery to store imported oil.
In 2017, KPC was given the mandate to manage KPRL to store imported oil. KPC says talks to take over the management of the refinery are almost complete, with a closure expected by the second quarter of 2022.
According to Soimo, the conversion of the tanks at Port Reitz is already underway with completion time expected to be 2023.
Somo says KPC has embarked on a business reinvention strategy, with the hallmark being the conversion of its tanks to store white fuel instead of crude oil.
As part of its recovery strategy, KPRL is also in talks with Kenya Electricity Generating Company and Kenya Power to tap into its 9.2-kilowatt power generation plant that has been idle since the refinery closed.
On product diversification, KPRL is focusing on the production of bitumen and grease.
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