Under the contract, Kenya Petroleum Refineries Ltd (KPRL), a subsidiary of Kenya Pipeline Company (KPC), will provide facilities and services to receive, store, handle and deliver crude oil for export through the terminal. This agreement marks a significant step in Kenya's oil sector, as it is linked to plans to develop the South Lokichar Basin in Turkana, which is expected to play a crucial role in the country's oil production and export capabilities.
An earlier plan for a crude pipeline from South Lokichar to Lamu has given way to a different approach: crude would move from Turkana to the coast by road or rail, be stored at KPRL and then be exported through Kipevu Oil Terminal II. This shift in strategy highlights the evolving nature of Kenya's oil logistics and infrastructure development. Gulf Energy took over Tullow Oil’s upstream operations in Kenya, and first oil is expected by late 2026, a timeline that has generated considerable interest among stakeholders in the oil and gas industry.
However, the agreement has not been without controversy. Court documents claim that KPRL signed the agreement without publicly disclosing its details, raising questions about transparency and accountability in the management of public resources. KPC has responded to these concerns by stating that the Sh93.68 billion figure is based on projected crude throughput and tariffs and is not guaranteed revenue. This clarification is important, as it underscores the speculative nature of the financial projections involved in the deal.
The KPRL site offers about 484 million litres of storage capacity and 377.7 acres of land next to the port, which are essential for accommodating the anticipated volume of crude oil exports. Kenya’s first crude exports depend on this route, and the case tests how large deals involving public assets are disclosed and awarded. As the country moves forward with its oil ambitions, the scrutiny surrounding this agreement may set a precedent for future contracts and the governance of public resources in the sector. The outcome of this situation could have lasting implications for both the oil industry and the Kenyan economy.
