Petroleum Information

The Upstream Sector in Kenya involves petroleum (oil and gas) exploration, both onshore and offshore within Kenya’s four sedimentary basins i.e., Anza, Lamu, Mandera, and Tertiary Rift. The Upstream Directorate also deals with licensing of open petroleum blocks to oil exploration companies, monitoring of exploration activities, development, production, transportation, and export of crude oil.

Exploration History

Oil exploration in Kenya began in the early 1950s when the first Oil Exploration License (OEL1) was granted to B.P Shell Development Company to operate in the Lamu Embayment.

To date ninety-five (95) exploration wells have been drilled by various oil exploration companies in the four sedimentary basins. The exploration wells so far drilled give a very low well density of approximately 1 well for every 12,200 Sq. Km. The well density needs to be increased to accelerate hydrocarbon discoveries across the four basins.

The optimism for more discoveries has been increased owing to improved exploration methods due to advancement in technology that has improved data acquisition, processing, and interpretation tools and techniques.  In addition, the recent hydrocarbon discoveries in Block 13T and Block 10BB in the Tertiary Rift Basin, Block 9 in the Anza Basin, and Blocks L8 and Block L10A in offshore Lamu Basin prove are evidence of the presence of an active hydrocarbon system.

The Midstream Sector comprises all or any operations related to petroleum transportation, storage, refining operations, or natural gas processing operations that are related to multiple development areas including operations for the liquefaction of natural gas.

Petroleum Refining

The Mombasa-Kenya Petroleum Refineries Limited (KPRL) was the only refinery in East Africa. At one point, the facility was jointly owned by the Kenya Government and Essar Energy of India. Until its closure in September 2013 following Essar’s pullout, it used to refine 40% of all petroleum products requirements in the country. Its nameplate capacity is for 4 Million MT per annum but was operating 1.6 Million MT of crude per year, producing Premium Motor Spirit (PMS), Regular Motor Spirit (RMS), Automotive Gas Oil (AGO), Dual Purpose Kerosene (DPK), Liquefied Petroleum Gas (LPG), Fuel Oil Grease and Bitumen.

Challenges that KPRL faced include frequent electrical power interruptions; overstretching the platformer units beyond the design limit in an attempt to comply with the switch from leaded to unleaded gasoline; higher than normal fuel and performance loss because of top recirculation and power interruptions and breakdowns; diesel sulphur specification restriction imposed worldwide for a cleaner environment; reliance on electrical power provided by KPLC; inability to deliver products on time due to power interruptions and lack of adequate water supply.

Following the closure of the facility, attention turned to alternative ways of using the refinery including potentially converting it into a storage facility to meet the challenge of inadequate storage for strategic and operational stocks in the country.

Modernizing the refinery was the other option. A more viable, modernized facility would produce more competitive products, create jobs and in the event of oil discovery in the region, be a strategic asset for processing such crude oil. The Government has also finalized plans to build another refinery in Lamu and under Lamu Port and Lamu South Sudan Ethiopia Transport Corridor (LAPSSET).

Kenya imports all its petroleum requirements of which 90 percent of the imports constitute white products i.e., Super Petrol, Diesel and Dual-Purpose Kerosene. The current local consumption is approximately 5 million tons p.a.

Importation of Refined Petroleum Products

The process of importation of refined petroleum products in the country is centrally coordinated by the Ministry in Charge of Petroleum through the G-to-G framework. There is an agreed Price Build-up for the Refined Products. The Price is an aggregate of FOB, Freight &Premium plus Local Currency components.

Initially, petroleum products were imported through the Open Tender System (OTS). On 10th March 2023, the Government of Kenya entered into Master Framework Agreements (MFAs)with Multinational oil companies for the supply of petroleum products under a Government-to-Government arrangement (the G-to-G arrangement) on extended Credit Terms. The products for the Local Market are paid for in KES while those for the Transit Market are paid for in USD. Jet A-1 is also paid for in USD.

Oil Marketing Companies sends their monthly cargoparticipations through SupplyCor, who allocates them according to their throughput. The Government informs the Supplier of the quantity of product to be imported per month under the terms of the G-to-G. The products imported under G-to-G are sold to the Oil Marketing Companies by Nominated OMCs under the provisions of the Open Tender System. Kenya Pipeline Company (KPC) receives the imported refined petroleum products in its integrated Kipevu Oil Storage Facility(KOSF) and/or Kenya Petroleum Refineries Limited (KPRL)and/or VTTI Terminal as required and obligated by Law under Legal Notice number 197 of 2nd December 2003.