Idle Oil production equipment sought by Kenya as prices fall

Denis Gitau | May 5, 2020

An opportunity to acquire cheaper oil production equipment has presented itself in the form of the rapidly declining international crude oil prices caused by the COVID-19 pandemic.

Andrew Kamau, the Petroleum Principal said that the processes involved in the purchase of crude oil production equipment will now be sped up to take advantage of the current downtime in the industry. This will enable the country to make the most of the cheaper prices.

Seeing as the dip in international crude oil prices will cause most equipment to stay idle as oil wells get closed, Kenya has been presented with an opportunity to get more friendly equipment hiring deals.

Mr.

Kamau said, “Before we start production, lower crude oil prices will still be good for us. As soon as we can travel, we will deploy officers to go and negotiate favorable deals to hire oil rigs and other equipment which are quite easy to procure now when the market is this low.”

As Tullow Oil, the lead agency in Kenyan oil fields may exit Kenya due to financial constraints, the news of possibly being able to hire equipment at a cheaper price came as a much-needed bit of good news.

In 2019, Sh1.5 billion was earned by the country after the sale of the first crude consignment to Chinese oil multinationals according to the latest official data.

However, since the August 2019 shipment, there has been very little happening as a result of the erosion of roads from Turkana by heavy rains. This led to the stoppage of crude oil trucking that resulted in Tullow postponing the possibility of offering a final investment decision on the project.

Mr. Kamau further said that the government was nearing completion of the land surveys for the oil fields as well as those for the crude oil pipeline to Lamu when coronavirus struck. The pandemic disrupted most of the plans that were yet to be completed.

Various hurdles faced in the East African oil fields were pointed out by Tullow in its annual report for the year 2019.

The company, however, maintains that the Kenyan fields remain viable.

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