Kenyan Cabinet Approves Bid To Pump Oil Commercially By 2017

by Ship & Bunker News Team
Monday August 15, 2016

Analysts who took a dim view of news that Organization of the Petroleum Exporting Countries' (OPEC) members are contributing to the persistent oil glut by pumping oil in record volumes presumably take no solace in word that Kenya's ministry of energy has approved the country's plan to produce crude commercially next year.

The approval was granted this week during a special meeting chaired by Kenya's president Uhuru Kenyatta;  a subsequent statement read, "The country is now getting ready to full commercial exploitation."

Kenya hopes to extract as much as 4,000 barrels of crude oil daily by June of 2017, with product refined at the Kenya Petroleum Refinery, which was re-acquired by the government from Essar Energy earlier this year.

Work is currently underway on road rehabilitation leading to the refinery and on the upgrade of heating tanks, and Tullow Oil PLC, which discovered oil in Kenya in 2012 (an estimated 750 million barrels of recoverable reserves) calculates that life of field development costs should be in the region of $25 to $30 per barrel.

But even though virtually any addition to commercial stocks may be cause for concern given the current global climate, The Wall Street Journal points to an International Energy Agency disclosure this week that the long-standing global oversupply is waning, even though the world's leading exporters pump at record levels.

Still, many experts are debating the size and duration of the oversupply and if concerns of demand will supplant the current concern about low prices anytime soon: the notion that we're still in the stuck in the mud was underscored earlier this week by no less than OPEC itself, in the form of its Monthly Oil Market Report, which disclosed that its Reference Basket fell nearly 7 percent in July "amid lower-than-predicted demand, high refined product stocks during the peak summer driving season, and rising crude supply."

The report also stated, "cheap crude has led refiners to produce more refined products worldwide, adding to the oversupplied market."