NAIROBI Oct 7 Kenya needs the oil price to be
no lower than $50-55 a barrel to exploit its oil reserves
profitably, a government official said on Friday.
The country will begin small exports of crude for a pilot
project next summer but Andrew Kamau, principal secretary at the
State Department of Petroleum, confirmed they are not expected
to generate profits.
Kenya has an estimated 750 million barrels of recoverable
reserves in onshore fields but lacks a pipeline to transport its
waxy crude from the arid northwest to an export terminal on the
A global oil glut has caused oil majors to scale back global
investment, although on Friday U.S. oil futures held above $50
per barrel, buoyed by the Organization of the Petroleum
Exporting Countries' plans to agree a coordinated production cut
Kamau told journalists that Kenya would begin transporting
2,000 barrels of oil per day down to the coastal port of Mombasa
"There is no money" being generated for Kenya from the pilot
project, he said, but the country would gain valuable
information about the market for its crude and the development
of some basic infrastructure.
Tullow owns 50 percent and Africa Oil and
A.P. Moller-Maersk each own 25 percent of the two
blocks where discoveries were made in 2012.
Kamau said the three partners and the government were due to
sign a joint development agreement next week on building an 891
kilometre (554 mile) pipeline between the town of Lokichar and
Lamu on Kenya's coast.
Reaching full field production would probably cost between
$5 billion and $8 billion for upstream infrastructure and
between $2 billion and $2.5 billion for midstream
infrastructure, said Martin Mbogo, the country manager for
Current oil prices would not deter the long-term project, he
"The JV (joint venture) isn't about to walk away from
Kenya," said Mbogo.
(Editing by George Obulutsa and Susan Fenton)