Kenya backs off from the idea of setting up its own oil refinery and turns its energy on utilising Lamu port to export crude oil

President Uhuru Kenyatta delivering his nation's address during Mashujaa celebration at Mombasa.
  • On Sunday during Mashujaa celebrations held at Kenya’s coastal city of Mombasa, President Uhuru Kenyatta announced that he had shelved the plan. 
  •  As a result, Kenya’s oil will be exported in form of crude oil and will fetch a lower price.
  • In August, Kenya shipped out its first consignment of 200,000 barrels of the Turkana crude oil worth Sh1.2 billion ($120 million).

Kenya will no longer set up an oil refinery as earlier announced.

On Sunday during Mashujaa celebrations held at Kenya’s coastal city of Mombasa, President Uhuru Kenyatta announced that he had shelved the plan and instead the government would use the Lamu Port to export crude from the Turkana oil fields.

“Lamu will play host to the newest port on the East African coast, which will begin its operations initially as a transshipment hub for global shipping lines,” said Mr Kenyatta during his nation address.

"It will be supported by a special economic zone that is expected to attract investors from across the world to undertake various economic activities and create jobs for our people," he added. 

Mr Kenyatta said the country’s crude oil deposits were insufficient to justify the construction of a refinery. As a result, Kenya’s oil will be exported in form of crude oil and will fetch a lower price.

"Our aspiration is to link the Lamu port, to the Lamu Port, South Sudan, Ethiopia, transport corridor through road infrastructure. Our aim being to make the Lamu the port of choice for transshipment, export of goods through the EPZ as well as exports of Kenya’s crude oil."

Uhuru’s statement comes just months after the government was all gearing to set up an oil refinery. In June, the government signed agreements with Total, Tullow Oil and Africa Oil Corp to develop a 60,000 -80,000 barrels per day crude processing facility for oil discovered in northern Kenya. 

In addition to the processing facility, a crude oil export pipeline from Lokichar in Turkana County to Lamu was also part of the deal.

Petroleum Principal Secretary Andrew Kamau later said that a refinery will only make sense if it has a refining capacity of at least 400,000 barrels a day.

Kenya used to have a crude oil refinery in Mombasa but its operations were halted in 2013 after plans for a Sh100 billion ($1 billion) upgrade were abandoned on the advice of consultants who said it was not economically viable. 

The government then took it over in 2016 and converted it into a storage facility.

  1. In August, Kenya shipped out its first consignment of 200,000 barrels of the Turkana crude oil worth Sh1.2 billion ($120 million), to test the international markets’ reception of the country’s light and sweet crude oil ahead of commercial production expected to kick off in the second half of 2023.

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