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Kenya Gets Two Design Options for Lamu Crude Pipeline Project

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Kenya has been presented with two designs for the Lokichar-Lamu crude oil pipeline (LLCOP) with a price variation of $122.2 million.

British firm Wood Group Plc has completed the front end engineering design (FEED) that shows Kenya can opt for a pipeline with onshore storage facilities that would cost $1.2 billion to construct or one with floating storage facilities at a cost of $1.1 billion.

In both cases, the designs show construction of the onshore pipeline will cost $568.2 million, pump stations $164.4 million with the variation mainly being in the marine terminal that will cost $145.9 million for onshore and $45 million for floating storage.

The company that will be contracted to implement the project under an engineering, procurement and construction (EPC) basis is earmarked to pocket $113.6 million, with the firm identified to supervise the project getting $13.1 million.

Notably, both the FEED and the environmental and social impact assessment (ESIA) studies show partners in project oil Kenya have been keen to ensure the project does not encounter environmental-related obstacles from conservationists and environmentalists.

British consultancy firm, Golder, in partnership with Kenyan company ESF Consultants undertook the ESIA.

“Following the signing of the commercial heads of terms with the government in June, project oil Kenya continues to make good progress,” said Tullow Oil in its latest trading update last week.

The ESIA has been submitted to the National Environment Management Authority whose approval is expected in the first quarter of 2020.

The firm added it has embarked on the EPC tendering process with the final investment decision expected in the second half of 2020.

The FEED and ESIA studies, which The EastAfrican has obtained, show Kenya wants to avoid legal hurdles akin to those faced by the Lamu coal plant, something that could have implications on mobilising financing from global financiers.

This is critical considering the government and the joint venture partners Tullow, Total and Africa Oil are set to commence discussions with prospective lenders seeking funds for the project, after weeks of carrying out market sounding.

The studies mark a major step in Kenya’s quest to race ahead of Uganda which is building a pipeline in partnership with Tanzania in commercial production of crude.

The FEED study indicates that Kenya has opted to create diversions in areas where the pipeline could have adverse environmental implications on wildlife.