A Review of the Nigerian Energy Industry

Kenya, Uganda to remain net oil importers past 2030

19 October 2014, Nairobi – EAST African states are likely to still be importing petroleum products beyond 2030 despite plans to upgrade and build new refineries following discovery of oil over the past few years.

A report by the International Energy Agency titled ‘Africa Energy Outlook’ forecasts that Kenya and Uganda’s oil production will rise in the early 2020s, but infrastructural constraints could curtail efforts to refine more petroleum to match or exceed demand.

“Capacity additions start to come online in the second half of the 2020s, with new refineries in Angola, Nigeria and East Africa. Overall, capacity additions are heavily skewed towards West Africa, close to the sources of oil production,” the report states.

IEAIEA estimates that the two countries will cumulatively produce 160,000 barrels per day onshore in the early 2020s. This means most of the crude will have to be exported owing to the slow pace of infrastructure development to cater for rising demand.

“The case for building up Africa’s local refining capacity would appear to be strong, yet – as in other parts of the world – relatively few projects actually make it off the drawing board,” IEA says.

“There are a number of reasons why. To realise economies of scale, refineries are now typically built with a minimum of 200,000 bpd capacity, with a view to high operating rates.”

Kenya’s plans to upgrade the refinery at Mombasa by selling a stake to Indian firm Essar Energy did not yield progress to upgrade the Kenya Petroleum Refineries Ltd.

The firm pulled out of a deal and will exit by selling back the 50 per cent stake to the the government. KPRL has not been used since operations were stopped last September pending conclusion of the divestiture process.

Energy Cabinet secretary Davis Chirchir had indicated that once Essar exits, KPRL would be converted into a storage facility for imported products.

In June, Uganda advanced its plans to build its own refinery, shortlisting four companies as lead investors in the project.
*Lola Okulo – The Star

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