Kenya Pipeline Eyes KSh 93.7Bn Revenue From 25-Year Gulf Energy Crude Oil Deal

Kenya Pipeline Company (KPC) is positioning its Mombasa infrastructure as the export gateway for Kenya’s planned commercial oil production after its KPRL subsidiary signed a 25-year crude storage and handling contract with Gulf Energy E&P B.V., projected to generate about KSh 93.68 billion in revenue.

• The agreement covers the receipt, storage, handling and delivery of crude oil through Kenya Petroleum Refineries Limited (KPRL) for export via Kipevu Oil Terminal II (KOT II).
• KPC said revenue will comprise fixed service fees and recovery of qualifying variable costs, although the KSh 93.68 billion estimate depends on throughput and tariff assumptions and is not guaranteed.
• The contract links KPC directly to the planned commercial development of the South Lokichar oil fields in Turkana, now operated by Gulf Energy after its acquisition of Tullow Oil’s Kenyan interests.

The government-backed development plan targets initial production of about 20,000 barrels per day before increasing to 50,000 barrels per day in a second phase. First oil is targeted for December 2026.

Unlike earlier plans centred on constructing a crude pipeline from Lokichar to Lamu, the current development plan envisages transporting crude from Turkana by road or rail to KPRL in Mombasa. The oil would then be stored at KPRL and transferred for export through KOT II.

The arrangement creates a new use for KPRL, whose refinery complex has been idle since 2013. KPC's acquisition of the facility added 484 million litres of storage capacity and 377.7 acres of land adjacent to the Port of Mombasa, including tanks designed for crude oil and petroleum products.

KPC separately disclosed that it had revised its service-level agreement with Kenya Ports Authority covering the operation and maintenance of KOT II. The revised agreement replaces the previous arrangement and clarifies operational responsibilities, performance monitoring, maintenance coordination and business continuity. KPC said the agreement does not carry significant direct monetary value but is critical to terminal operations.