Tullow Oil tanks at its Turkana discipline. FILE PHOTO | NMG

Turkana oil exploitation is in a dilemma, with Kenya sitting on about 100,000 barrels per day of crude however having no certainty if or when that oil shall be commercialized so as to add financial worth to Kenya.

The oil was found in 2012. However since 2014 altering world circumstances, primarily provide/demand uncertainties created by the power transition from fossil fuels to renewables, have diminished investor and financier urge for food to fund Turkana oil growth.

World buyers and financiers are at present opting to fund solely these new oilfields which have quick undertaking growth instances and low break-even oil costs that guarantee returns in a risky oil market.

These alternatives are normally in offshore areas (e.g. Guyana, Suriname, and lately Namibia) the place manufacturing and export infrastructure is fast to assemble. Onshore Turkana oil requires a minimal of three years to assemble an export pipeline through Lamu.

Present Turkana Oil buyers are both under-capitalized or not prioritising the undertaking, selecting as an alternative to supply their property to strategic buyers, a course of whose timelines can’t be assured.

The federal government has twice renewed investor oilfield licenses, understandably to allow finalization of discipline growth plans (FDP) because the buyers seek for consumers of their property.

The one approach that the buyers can guarantee Kenya of dedication to Turkana oil growth is by publishing timelines for ultimate funding choices (FIDs).

The Division of Petroleum might want to invite Kenyan upstream and midstream consultants for a brainstorming session to discover and inform obtainable choices for Turkana oil, with out prejudice to the continuing FDP research. Routine annual extensions of FDPs could also be robbing Kenya of treasured time as Turkana oil quickly loses financial significance and worth.

The perfect-case situation is, after all, the export of oil through Lamu, however my estimation is that this feature could also be far-fetched contemplating the diminished availability of oil growth funding, particularly by Western banks.

A extra lifelike choice is commercialisation of Turkana oil domestically, and this will entail inviting extra pragmatic buyers from the east (India and China) who could also be eager on a quite simple refinery in Turkana County to make primary distillation straight-run merchandise (LPG, kerosene, diesel, gasoline oil) with naphtha exported to fund imports of gasoline.

Additional, so long as Kenya continues to import gasoline oil and coal for heavy industries and thermal energy vegetation, uncooked crude oil can equally do these duties — a realistic albeit non-conventional answer that has foreign exchange advantages.

The final word despair choice is to depart the oil underground eternally. Sure, the Turkana oil dialog must be stored alive.