Kenya plans offshore jetty for oil tankers

November 2, 2011
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, NAIROBI, Kenya, Nov 2 – Kenya could in the next four years have an offshore petroleum offloading jetty in the high seas off the Indian Ocean to meet the rising demand for petroleum products in the country and the East African region.

National Oil Corporation of Kenya (NOCK), which is spearheading the project says a feasibility study should be completed by the second quarter of 2012 and if found viable, the tendering process will commence.

“We anticipate that the actual construction could begin by early 2013 and we expect it to take two years going by the amount of time it has taken other countries to build their own systems,” National Oil Managing Director Sumayya Hassan-Athmani explained.

The corporation is leaning towards the construction of a ‘Single Buoy Mooring’ (SBM) – as opposed to the Multiple Buoy Mooring’- which means that tankers can load or offload petroleum products from any point.

Although the location of the SBM as well as other details will be informed by the feasibility report, the firm estimates that the project will cost between Sh7.7 billion ($80 million) and Sh9.6 billion ($Sh100 million) which Hassan-Athmani said would be financed through a joint venture.

“We are focused on having it as a Public Private Partnership where the government, through the National Oil, will have a certain percentage and will also have another share where investors – whether local or foreign – will want to come in and participate,” she said although she could not immediately disclose how much stake each of the two parties would hold.

Once operational, the offshore jetty is expected to significantly reduce the infrastructural inefficiencies in the oil supply chain that has been blamed for the problems and high prices in the sector.

The benefits to be accrued include a significant reduction of demurrage charges incurred by oil importers which amounts to between Sh4.82 billion ($50 million) and Sh9.6 billion ($100 million) per year as well as the accommodation of bigger fuel vessels.

“The jetty will allow berthing of tankers of up to 280,000 Dead Weight Tonnes (DWT) compared to the current 80,000 DWT at Kipevu and 120,000 DWT after the ongoing dredging of the (Kilindini) channel is complete,” the MD explained.

The combination of these factors is expected to result in affordable fuel prices in the market and also greatly contribute to the transformation of the Port of Mombasa into a competitive hub for the petroleum business in the region.

The construction of the new facility is part of a bigger petroleum infrastructure master plan that the National Oil Corporation is drafting in order to address the current constraints and position the port and consequently the country competitively.

The plan estimated to cost between Sh14.4 billion ($150 million) and Sh19.3 billion ($200 million) also involves the development of the country’s strategic petroleum reserves and subsequently several nationwide storage facilities.

“The proposed locations for the strategic petroleum reserves include Konza, Mtito Andei, Mombasa, Nanyuki, Northern Kenya, Nakuru, Eldoret and Kisumu,” Hassan- Athmani disclosed.

The facilities which are designed to cushion the country from supply shocks with about 90 days of reserves will however be built gradually owing to the fact that it is a cost-intensive exercise.

However, with all these projects in place, the corporation is confident that it will effectively fulfil its mandate which includes price stabilisation.

The state-owned firm has an active retail network of 78 stations and a market share of 9.3 percent and hopes to grow this to about 15 percent by 2013.

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