SkyscraperCity Forum banner

What form of energy should Kenya focus most on attaining?

Kenya | Energy Thread - Power, Nuclear and Renewable Energy

484K views 2K replies 221 participants last post by  amtarch20 
#1 ·


Kenya Electricity Generating Company (KenGen) plans to produce an additional 500 megawatts (MW) to ease the energy crisis.

KenGen Managing Director Eddy Njoroge said the investments would enable the company play its role of stabilising power supply.

"The investment will guarantee enough additional and affordable capacity to cope with the anticipated rising demand at eight per cent annually," he said.

Last week, President Kibaki commissioned the 60 MW Sondu Miriu Power project that is expected to ensure constant supply of electricity in Nyanza and Western provinces.

KenGen has already identified key sources in new geothermal, thermal and wind power generation and is in the process of seeking funds to implement the projects, some of which are ongoing.

Some of the projects include Kipevu 3 thermal with a 120 MW capacity to be commissioned in October next year and a 5 MW wind plant to be commissioned later this year.

Other projects include Olkaria II third unit with a 35 MW capacity, Eburu 3 MW and Olkaria 4 with 140 MW.

"The projects are part of our strategy of diversifying power sources to reduce dependence on hydro, which suffers when rainfall is below expectations," said Njoroge.

The power producer is awaiting approval from the Capital Markets Authority to float a Sh15 billion bond.

Electricity Prices

The investments come at a time when the country is experiencing a biting energy crisis that has seen electricity prices increase due to dependence on thermal generation.

The situation will worsen if the short rains expected in October through December are not enough and oil prices in the international market continue on an upward trend.

This is because KenGen has shut down generation at Masinga power station and might be forced to close down Kamburu, if water levels continue to drop.
 
See less See more
1
#2 ·
another firm eyes geothermal energy

One of the losing bidders in the just concluded public tender to produce emergency power is keen to develop geothermal energy near Naivasha.

Muringa Holdings, a local energy consortium, has sent an expression of interest to KenGen and the Ministry of Energy to generate about 120 megawatts next to the area where Aggreko has been given the nod to set up an emergency power station, amidst the raging power crisis.

Last week, Aggreko, a UK firm, won a public tender to inject 60 mw into the national grid by the end of October.

Mr Gursharm Brar, Muringa’s managing director, said the company owns about 100 hectares of land in a parcel of land adjacent to the plot on which Aggreko will set up its thermal plants to be powered by ordinary diesel.

Muringa has applied for a 20-year concession and is partnering with Capital Turbines Equipment.

Mr Brar said Muringa is also exploring the possibility of producing a 600 mw coal fired power station in Mombasa which will be supported by a 500 kv transmission line from the coastal city to Nairobi.

Presently, Muringa, which supplies poles to the national power distributor KPLC, says it is exploring ways of evolving into a fully-fledged energy company by exploiting the opportunities for geothermal power production.

Under the East African Power Pool that will be mandated with developing a power market in the region, Kenya seeks to tap into its rich geothermal potential while Uganda will focus on hydropower as Tanzania concentrates on gas.

Already, Muringa says it has requested to be licensed as an independent power producer (IPP) by the Energy Regulatory Commission (ERC).

Muringa’s entry into the fray will break the dominance of Aggreko whose current and planned capacity will account for one third of the total national interconnected capacity.

Currently, Aggreko sells power to the KPLC at Sh17.72 per kilowatt hour of power. Its plants are powered by ordinary diesel while the Rabai Power Plant expected in October will be sell at Sh14.27 per kilowatt hour.

Geothermal power goes for Sh4.50 while hydro is cheapest at Sh2.50 for every unit of power bought by the KPLC.
Building an emergency power station is expensive, estimated at $15 billion while an IPP requires only Sh1 billion.

Emergency power production is usually commissioned for a short period despite the high capital outlay, making the undertaking risky because it is only required in case of emergencies.

The Energy ministry is fronting for public-private initiatives for its programmes on rural electrification and geothermal steam development under the Geothermal Development Company (GDC) whose role is to accelerate geothermal power development.

It is also seeking the development of power transmission highways to allow for open access under the newly formed Kenya Electricity Transmission Company (Ketraco), granting the private sector a key role in power generation and distribution. “Private sector investments will be recovered through stable and predictable cost reflective regimes executed by the ERC.

Power buying deals that are negotiated between prospective investors and KPLC are paid for by the parastatal and by extension, the consumers.

Industry regulator - ERC however, says there is need to avoid over capacity that would be very expensive to maintain. Capacity additions should therefore closely mirror economic growth prospects.

Transmission lines
The Government –through Ketraco also hopes to build various high voltage transmission lines to strengthen the network in rural areas in order to reduce system losses.

The energy from the plants will need to be evacuated to demand centres using either existing or transmission lines to be developed by Ketraco.
 
#3 ·
Muringa Holdings pitch would be a good development in Kenya's now precarious energy sector. However, KPLCo also needs to just simply shape-up to maximise on what we now have. Making the the best of a bad situation. A couple of days ago in the Daily Nation's "Watchman", an applicant who had been granted the much hyped Stima Loan couldn't be accessed power in Bungoma despite fulfilling all requirements and a running loan facility to boot!
 
#6 ·
It’s all systems go for oil pipeline project

The pipeline is expected reduce the high transportation costs of oil products

The construction of the much awaited oil pipeline from Eldoret to Kampala is expected to kick-off next month, the government of Uganda has announced.
Speaking during a recent media interview, Uganda energy ministry’s commissioner for petroleum, Ben Twodo said work on the terminal and pipeline is expected to start in April.
The government of Uganda has already handed over land to Tamoil East Africa Ltd - the project’s main contractor.
Twodo noted that the project was supposed to begin two years ago but it has been beset by delays.
“Work has been pending since 2007 due to a land ownership wrangle. Fortunately, the disputing sides; Mulowooza and Brothers Ltd and N Shana Company Ltd have since signed a Memorandum of Understanding with the Government that okayed the developments on the land,” said Twodo.
According to Gamal Buargoub, the Project Engineer of Tamoil, construction of the Eldoret- Kampala phase will last 18 months. The project will cost over US $73m by the time of its completion in 2010.
Upon completion of the Eldoret-Kampala section, Turmoil will proceed to construct a pipeline connecting Kigali to Kampala. The development is expected to reduce the high transportation costs of oil products from Kenya to its landlocked neighbours by road.
The construction of the pipeline will be fully funded by the Libyan government and Tamoil, the mother company of Tamoil East Africa Ltd. Tamoil East Africa Ltd won the rights to construct the pipeline in July 2006 after beating off stiff competition from China Petroleum Pipeline Engineering Corporation and MISA-Madhvani International South Africa/Shell Uganda, joint bid.
The company will manage the pipeline for the next 20 year, after which it will be handed over to the the three East African countries.
 
#7 ·
the government will build electric transmission line from mombasa to nairobi

The World Bank has approved a Sh20 billion fund for the re-carpeting of the Northern Corridor that links Kenya to the landlocked countries in the Great Lakes region of East and Central Africa.

This approval increases World Bank’s support for the Northern Corridor Transport Improvement Project (NCTIP) to Sh36.75 billion, up from the initial financing of Sh16.5 billion. The Bank’s Executive Board approved the initial funding in June 2004.

The approval of the funds to be used for the improvement of the Mau Summit to Kisumu road, says Finance Minister Uhuru Kenyatta, is a clear indicator that Kenya is still considered a viable destination for donor funding.

“Despite the hard economic times its not all gloom as some parties may be implying,” The finance minister said Friday.

At the same time the Kenyan government signed funding agreements for two loans amounting to Sh4.52 billion and Sh6.87 billion from the French government. The soft loans will be used facilitate the erection of the Nairobi-Mombasa very high voltage line and improve the Mombasa water and sanitation services.

Speaking during the signing ceremony Mr Kenyatta said the existing transmission infrastructure between Mombasa and Nairobi could be overstretched in the next two years hence the need to have them replaced.

“The new connection will also facilitate the interconnections with Tanzania, Zambia and SouthAfrica,” Mr Kenyatta said.

French Ambassador to Kenya Elisabeth Barbier said during the ceremony that the French government had increased their allocation of funding to Africa to Sh14.4 billion.
http://www.constructionkenya.com/archives/world-bank-approves-sh20-billion-for-roads
 
#8 ·
East Africa states pursue joint power supply plan







Powerlines. The review, which is expected to last 15 months, will enable Kenya to connect her national power grid with those of neighbouring states with surplus power.


East African countries are drawing up a joint plan to boost electricity supply across the region in the face of acute shortfalls sparked by poor rains.

They are aiming to create a power pool through the aggressive tapping of alternative power sources under the East African Power Master Plan (EAPP).

The proposed East African Power Master Plan (EAPP) is to be updated to include an earlier study by Kenya , Uganda and Tanzania, the original members of the East African Community (EAC).

The African Development Bank (AfDB) will finance the review to the tune of $1.2 million (Sh96 million) to update the EAC’s study of 2005.

The review, which is expected to last 15 months, will enable Kenya to connect her national power grid with those of neighbouring states with surplus power.

The plan advocates for exploitation of alternative sources to meet arising demand.

“The EAPP envisages a time frame of up to seven years to a fully-fledged regional power system, with the creation of a power pool as a central feature,” said Mr Magaga Alot, EAC’s spokesperson.

EAPP, with its secretariat in Addis Ababa, comprises Egypt, Sudan, Ethiopia, Kenya, Rwanda, Burundi and the Democratic Republic of Congo.

While Tanzania and Uganda are not members of EAPP, it is understood that they have started to participate in some of the activities. Tanzania has an excess of 350 megawatts but it cannot be distributed to other countries because there is no interconnection in the region.

A transmission line connecting southern Ethiopia and Mt Longonot will be constructed to tap 500MW of hydro power and help narrow current deficit of national power requirements.

Construction follows completion of a feasibility study by a coalition of donors to establish the viability of the project to interconnect the national grids of the two countries. The study was undertaken by German power consultants Fitchner GMBH at a cost of Euros 1.7 million (about Sh17 million).


Feasibility study
“The feasibility study for a transmission line from Ethiopia to Nairobi is ready. This is one of the interconnection projects for the Nile Basin countries,” said Ms Domina Buzingo, AfDB’s country representative in Nairobi.
The Congo River has vast hydro potential enough to meet requirements for all the East and central African economies. Kenya also intends to tap into the southern Africa Power Pool, according to Energy minister Kiraitu Murungi.

“Procurement of consultancy services is at an advanced stage as both technical and financial evaluations have been completed.

A ‘No objection’ for the final evaluation is awaited from the AfDB after which consultancy services will be awarded,” says a brief seen by the Business Daily.

While interconnection is believed to be the least cost solution for power supply, geothermal is the most reliable form of renewable energy and hydro power is the cheapest source of electric power.

The potential in geothermal alone is 7,000 MW while huge potential is in renewable, solar and wind. “Regional interconnection is the way to transform our economies and mitigate power shortage,” said infrastructure expert, Dr Eric Aligula.

Dr Aligula said high cost of fuel and over reliance on hydro power generation makes it necessary to diversify to other cost effective forms of energy as well as conservation for both domestic and industrial use.

“Geothermal is the key to affordable electricity and in the long run it will reduce the cost of electricity in the country,” said Dr Aligula of the Infrastructure and Economic Services Division at the public policy think tank - the Kenya Institute for Public Policy Research and Analysis (Kippra).

In April, the EAC member states announced they will spend about $1.8 billion on the implementation of the power master plan in the next seven years.

Of this amount, some $1.2 billion will be used for power generation while $600 million( about Sh48 billion) will be spent on power transmission projects
 
#9 ·
UNIDO commits Sh159 million to green energy project

UNIDO commits Sh159 million to green energy project







The project is expected to generate additional power for the country via solar energy, biomass, wind and biogas.

The United Nations Industrial Development Organisation (UNIDO) has committed Sh159 million to a green energy project called Lighting Up Kenya, which is expected to generate additional power for the country via solar energy, biomass, wind and biogas.

The investment, meant to add more than 100 megawatts of power to the national grid, is aimed at reducing the cost of doing business in Kenya, said Yoshiteru Uramoto, UNIDO deputy director general.

“The cost of production is high in Kenya especially when manufacturers use fossil fuel to run their machines. We can reduce this cost by using alternative energy,” said Mr Uramoto.

Kenya’s manufacturing sector and small businesses are facing a possible energy crisis following the shutting down of a hydro power plant last week due to inadequate water for electricity generation.

Manufacturers blame the high cost of locally produced goods on the high electricity cost.

Kenya has a total installed capacity of 1,200 megawatts with a generation mix of 56 per cent hydro, 36 per cent thermal, and eight per cent geo-thermal, but this is under threat following a prolonged drought that is stressing hydro power dams.

The country’s hydro-electricity generation capacity stands at 700 MW, but electricity generator KenGen says this has reduced by 12 per cent due to inadequate rainfall.

Prime Minister Raila Odinga named a team to fast track expansion of power generation and use of clean and renewable sources of energy such as wind, solar, biomass and biogas.

According to government plans, more than 2,000 megawatts will be added to the national grid with the use of green energy.

This is in line with the UN’s green energy projects and recommendations that countries in Africa should focus on generating power from wind and solar power.

Most of such projects are beginning to take off in Kenya’s outlying districts where communities have put up solar and wind plants that pump up about 100 megawatts of electricity for use in lighting up homes.

Next month President Kibaki is expected to launch a bio-diesel strategy that will help the country produce adequate amounts of renewable fuel by the year 2012.
The Industrialization ministry says the UNIDO funds, allocated for community electricity generation, can help bridge supply shortfalls following the shutting of the 40 megawatts Masinga Power Station after water levels went down, making the plant unable to sustain power generation.

“The money from UNIDO is particularly important during this time when we have lost a power plant due to lack of water. Our manufacturing sector could face difficulties if we don’t get alternative sources of electricity,” said Industrialisation minister Henry Kosgey.

Local manufacturers plan to cut their electricity consumption so as to conserve the available power to last longer.

The allocation from UNIDO will go to independent community power centres in Kirinyaga, Siaya, Murang’a, Kiambu, Machakos and Bungoma.

“Kenya’s electricity generation capacity, especially in rural areas, is huge. This can help the country especially following the closure of a hydro electricity plant because of lack of water,” said Mr Uramoto.

According to the United Nations, Kenya has capacity to generate more than 3,000 megawatts of electricity if the country taps into wind energy in its vast northern districts.

Potential investors
The wind energy could help inject additional power to the national grid to alleviate fears of the manufacturing sector and potential investors who have grown cold feet in putting their money in Kenya.

The Nairobi based United Nations Environmental Programme (UNEP) says the country has adequate wind to generate energy for both export and domestic use, adding that it can reduce its cost of energy by taping into the clean and efficient energy provided by its vast northern district fields.

The UN’s estimate of an existing capacity to generate 3,000 megawatts could spur renewed hope in the manufacturing sector that has complained of high electricity costs which have been caused partly by the volatile price of crude oil in the international markets.

The UN says if Kenya tapped into wind energy it would avoid the massive power rationing experienced in 2000. The power shortage was blamed on inadequate rainfall and failure to implement planned generation projects on schedule.

Compared to regional countries, Kenya has a large manufacturing sector serving both the local

market and export markets. According to the Economic Survey 2009, the sector contributed about 10 per cent of the GDP in 2008.

In May, the Africa Development Bank (ADB) injected Sh32 billion into a private consortium to develop an initial 300MW from wind energy in Turkana district — equal to around 25 per cent Kenya’s current installed energy capacity.
This follows the Government’s introduction of new legislation covering electricity generation.
 
#10 ·
Projects to ease power shortfalls
Su



Technicians from the Kenya Power and Lighting Company install a new transformer. Photo/FILE
By NATION Reporter Posted Sunday, May 10 2009 at 16:51

Current power shortfalls are set to ease with the provision of a Sh5.8 billion loan to the government by the African Development Bank, for a 450 kilometre-long power transmission project between Mombasa and Nairobi.

Related Downloads

The project, designed to facilitate the evacuation of power generated in the Mombasa area to Nairobi and eventually into the national grid, will also help Kenya meet future demand growth for electricity.

“The project will involve the construction of a 450 kilometre 400 kV double-circuit transmission line between Rabai (Mombasa) and Isinya (60km from Nairobi),” read a statement from the financial institution.

The loan will also assist in the construction of new transmission lines from Isinya to the Embakasi substation in Nairobi and meet part of the costs for the expansion of a 19km 220 kV double-circuit line between the Rabai and Embakasi substations and the installation of shunt reactors at Rabai.

The completion of the project is expected to initially enhance the transfer capacity to about 330 MW with the possibility of an upgrading of up to 950 MW, as national demand for power increases. Meanwhile, to facilitate constituencies that are not fully covered by the national grid with access to electricity, the government also plans to construct 33 new diesel power stations.

Plans are also underway to construct several other electricity stations that are either powered by wind or solar energy, technologies that are not only renewable and cheap in the long run but also a lot cleaner for the environment. Twenty-four constituencies have already been identified as areas where the facilities will be set up, according to a draft rural electrification master plan.

The plan, obtained by the Nation on Sunday, names the constituencies as Turkana North, Central and South, Samburu East and West all of which are in the Rift Valley Province. There are also Lamu, Bura, Lamu East and Galole constituencies in Coast Province.

Others are Dujis, Mandera Central, West, East and South, Lagdera, Wajir North and West, Fafi and Ijara constituencies in North Eastern Province, North Horr, Isiolo South, Laisamis, Moyale and Saku constituencies in Eastern province.

Already, says the plan being developed by a German consulting company MVV Decon, the government has already tendered for eight of these power stations. “The generation mix of decentralised rural schemes will in the next five years supply an additional peak demand of 41 megawatts including electricity generated by solar and wind energies,” it says.

The government also plans to extend several power grids in the remaining 177 constituencies, a process likely to cost Sh120 million over the next five years. It is expected that when this is implemented, some 902,000 Kenyans in the rural areas will have access to electricity.

Overall, the master plan envisages that within the next 10 years, the government will provide electricity access to about one million households at a cost of Sh112 billion. This year alone, the government expects to connect some 65,000 new customers to the national grid, an investment that requires Sh16 billion.

Energy PS Mr Patrick Nyoike said recently that the move to scale up Kenyan’s access to electricity came out of the realisation that many parts of the country were not connected to the grid. It is estimated that only 10 per cent of Kenya’s approximated 38 million people have connection to electricity, while accessibility stands at about 63 per cent.

“These levels of access to electricity are not encouraging considering that average rural connectivity levels for the developing world is about 40 per cent,” said the PS. Mr Nyoike added that some African countries have higher connectivity levels, citing South Africa, Morocco, Tunisia and Ghana. He said that with the establishment of the Rural Electrification Authority, the target for rural electrification

 
#12 ·
kenya step up oil exploration

The Government has stepped up oil exploration though no deposits have yet been discovered.


The National Oil Corporation MD Mwendia Nyaga (centre), the Standard Group team led by MD Paul Wanyaga (second right) and Assistant Commercial Lawrence Njiru (right) when they paid a courtesy call on the Corporation’s head offices in Nairobi. Partly hidden is Jane Njoroge (second left) and Corporate Affairs Manager Chris Karanja. Photo: Jonah Onyango/Standard

National Oil Corporation of Kenya (NOCK) Managing Director Mwendia Nyaga, however, said chances of finding oil were high and more explorers had shown interest.

The State-owned corporation that distributes oil products also co-ordinates exploration.

"There are high prospects as we have received positive indicators from the wells drilled," said Mr Nyaga, when he received Standard Group Managing Director Paul Wanyagah in his office on Thursday.

"These indicators have attracted more explorers and in case of discovery, the process will be accelerated."

So far, 31 wells have been drilled and more than Sh1 billion spent in collecting data that would help in further exploration.

Exploration is concentrated in four regions that include the Coast, the basin between Lamu and Lake Turkana, Rift Valley block that extend from Kerio Valley to Magadi and the Mandera basin that covers northern Kenya.

Nyaga said the basins have been sub-dived into 36 exploration blocks where more than ten multinational companies have been licenced to explore seven.

Wanyagah praised the Government for creating the organisation and charging it with the responsibility of co-ordinating exploration. He said with the high oil prices in the global market, discovery of commercial oil deposits would be a boost to the economy.

"We urge you to keep updating Kenyans on exploration efforts especially now that oil prices have been escalating," said Wanyagah.

On oil prices, Nyaga said he shared in frustrations expressed by motorists who have not benefited from the prevailing low crude oil prices in the global market.
desert burner is online now Report Post Edit/Delete Message
 
#13 ·
refinery will be upgraded to 1 million barrel a day in the next 3 years

Indian petroleum giant, Essar Group, has concluded its bid to acquire a 50 per cent stake in Kenya Petroleum Refineries Ltd (KPRL).

Essar Group made the announcement on Friday after a year of negotiations to buy out three oil majors that owned the facility with the Government.

Following conclusion of the deal, Essar and the Government will invest $400 million (Sh22 billion) in the next three years to upgrade the refinery’s production capacity to one million barrels a day.

The refinery has a capacity of about 72,000 barrels a day.

"The conclusion of the deal fits our strategy in expanding to Africa’s petroleum industry and positions our company as a key player in this region which has immense oil reserves," said Mr Prashant Ruia, the promoter-director of Essar Group.

"Our model in India is to be a refinery with retail and market distribution. We have 1,500 gas stations in India, which we operate on a franchise basis. we will see how we can bring that model to Kenya," he said.

Essar paid $10 million (Sh760 million) to acquire part of KPRL after a competitive bid steered by Wood McKenzie Consultants of the UK, edging out Oil Libya and Reliance Industries.

Pre-emptive rights

The company also paid an additional $2 million to the Government to waive its pre-emptive rights. The rights allow an existing shareholder to purchase any additional shares if a chance arose before any other third parties are considered.

Sourcing for an investor began last year after studies showed the 67-year-old refinery needed to be modernised to meet growing demand for petroleum products in the region.

Previous shareholders including Chevron, Shell and BP turned down the offer to increase their shareholding and raise money needed for the exercise saying the planned upgrade had failed to meet their investment criteria. "We are happy to conclude the deal and will immediately embark on upgrading the facility," said Prime Minister Raila Odinga.

The Prime Minister’s office coordinated the process of sourcing for a new investor under the PM’s Round Table initiative. Once upgraded, the refinery will also increase current production of liquefied petroleum gas, from the 30,000 tonnes to 120,000 tonnes a year.

The deal comes barely weeks after Uganda reported massive oil reserves find approximated at over 500 million barrels.
 
#14 ·
KTDA to set up energy arm






KTDA managing director, Lerionka Tiampati. Photo/FILE
By NATION ReporterPosted Friday, July 31 2009 at 13:08

The Kenya Tea Development Agency (KTDA) will create an energy subsidiary to aid its power generation initiatives.

The move is aimed at reducing the money spend by factory companies on energy and increase tea farmers’ incomes.

The tea agency’s managing director Lerionka Tiampati said the subsidiary will consolidate KTDA’s ongoing initiatives and reduce the cost of energy investments by getting the 60 factory companies under its aegis to work together.

He made the announcement during a workshop organised by the Ministry of Energy where feasibility reports for 12 new sites for potential small hydro projects were presented.

The studies were carried out mainly in tea growing areas and were funded by the government to the tune of Sh40 million.

“The mandate of the new company will be to explore opportunities in the energy sector including hydro, wind and solar with a view to reducing production costs at the factory level for the benefit of the farmer,” said Mr Tiampati.

Last month, KTDA signed a power purchase agreement with Kenya Power and Lighting Company to supply surplus electricity from its Imenti mini-hydro project.

The project was constructed by small scale tea farmers of Imenti Tea Factory and has a capacity of 1MW.

Sell surplus

A second project located along Gura River in Nyeri District is at the initial stages of implementation and will supply power to four factories when complete. Any surplus power will be sold to the national grid.

According to Mr Daniel Theuri, the team leader at Que Energy Limited, which conducted the feasibility studies, 10 of the 12 sites are commercially viable with an estimated pay back period of between two and five years.

The 10 sites have a combined capacity of 22 MW.



Small hydros are constructed under a process known as run of river and do not affect local communities as power is generated from the natural flow of the river.

Move fast

Energy minister Kiraitu Murungi urged the agency and its factory companies to move fast and implement the projects at the viable sites.

He said affordable financing could be accessed by KTDA once a proposal for implementation is approved.

Mr Murungi said success of the small hydros depended on the protection of water catchment areas, which were in danger of total destruction.

He announced that his ministry had set aside Sh100 million for tree planting countrywide to secure the country’s key energy sources.

The Ministry of Energy initiative comes at a time when Kenya is facing an unprecedented energy and water crisis caused by wanton forest destruction in water towers.
 
#15 ·
This time we’ll strike it rich, says oil prospector

After a threat from prevailing global economic recession, oil exploration efforts are looking up once again.
Africa Oil Corporation— a Canadian oil firm— has re-jigged the efforts through a new partnership to explore black gold in the arid northern Kenya region.
Africa Oil Corporation signed the agreement with the Dubai-based oil exploration firm, Black Marlin Energy Ltd (BMEL) to seek for oil and gas resources in Anza basin, thought to hold part of the oil wealth extending to South Sudan.
An engineer at an oil exploration site. The renewed oil search is a major boost to Kenya’s oil exploration initiative. [PHOTO: FILE]
They would prospect oil in Block 10A in the Anza Basin of northern Kenya.

The agreement also extends to exploration of potential oil fields in Ethiopia and lead towards drilling if commercial quantities of oil are found in northern Kenya and in Ethiopia’s Ogaden Basin in southern Ethiopia. In Kenya, Africa Oil will transfer a 20 per cent license interest to Black Marlin Energy subsidiary, East African Exploration Ltd (EAXL) in the Production Sharing Contract.
Black Marlin Energy Chief Executive Jeff Hume announced last week, the firm plans to invest Sh770 million over the next three years in the exercise. He said Africa Oil brings strong technical experience to the Joint Venture while Black Marlin’s business model offers high quality seismic services.
gas potential
"I am very pleased to be able to announce this strategic and exciting transaction and look forward to working very closely with Africa Oil Corp," he said last week.
Hume believes there is good oil and gas potential in the Anza Graben in Kenya. "We believe that oil and gas will be discovered somewhere in Kenya in the next two to three years," he said.
Hume said in the prospective Block 10A Production Sharing Contract, Africa Oil has executed a seismic contract with BMEL’s Upstream Petroleum Services Ltd, a geosciences services unit.
EAX is an operator in Block 1 in Kenya with a 50 per cent interest and is 40 per cent partner in Block L17/L18 near Mombasa.
Kenya represents EAX and Black Marlin’s largest exploration commitment worldwide. Africa Oil holds a 100 per cent interest in Block 10A and has farmed into Block 9 with a 30 per cent interest. Africa Oil Corp farm-in transaction with BMEL is however subject to government approval. The oil exploration agreement is a boost to the country’s oil exploration initiative as it comes against a continued global economic downturn that has restricted the operations of many oil-prospecting companies.
facilitate growth
Opening the fourth East African Petroleum Conference in Mombasa recently, Energy Minister Kiraitu Murungi said the economic crisis was a serious threat to the country's pursuit for oil deposits as most companies involved in the search were caught up in the situation.
In his Budget speech Finance Minister Uhuru Kenyatta said the Government has introduced new measures to reduce the cost and encourage private sector players to conduct oil exploration activities.
He said plans are in place to grant import duty exemption on equipment and inputs excluding motor vehicles imported by a licensed company for direct and exclusive use in oil, gas or geothermal exploration and development.
Uhuru said these would help fast-track ongoing exploration initiatives and complement Government’s efforts towards addressing the aspirations of the people and facilitate growth of the economy.
The measures in the 2009 Budget anchored on the Theme: "Overcoming Today’s Challenges for a Better Kenya Tomorrow" comes when local oil exploration efforts appears to be looking up again after encountering serious threat from the global economic recession.
Kiraitu said most companies engaged in oil exploration in the country had either put on hold or scaled down operations due to the capital intensity of the exploration process.
"I wish to confirm that Kenya 's exploration efforts have been seriously affected by the economic crisis," he said.

http://www.skyscrapercity.com/editpost.php?do=editpost&p=38317932
 
#16 ·
Essar appoints CEO to oversee refinery upgrade

Essar appoints CEO to oversee refinery upgrade





Engineers repair a section of the Kenya Petroleum Refineries Limited. The refinery is meant for upgrade at a cost of $400 million (about Sh32 billion) to enable it produce more white oil products such as cooking gas, jet fuel and petrol as opposed to its current state where it does more fuel oil, making it less efficient and profitable.
By Zeddy Ssambu (email the author)

Posted Tuesday, September 1 2009 at 00:00

Essar Oil and Gas has appointed a new chief executive for the Kenya Petroleum Oil Refineries Limited (KPRL), putting fresh urgency to the delayed upgrade of Kenya’s sole refinery.

Business Daily has established that the Indian- based oil giant has tapped Mr Raj Varma from its headquarters in Mumbai to help in the refinery’s turnaround, just a month after Essar completed the purchase of a 50 per cent stake in KPRL from three oil majors: Shell Petroleum Company, Beyond petroleum and Chevron Global Energy.

He takes over from Mr John Mruttu who becomes the chief operating officer after a new shareholder agreement that gave the Indian firm the position of CEO and chief finance officer.

The change in leadership is the clearest signal that Essar is set to stamp its authority in the management of the refinery, which was under the control of the Kenyan government that holds the remaining stake, and executives at the firm reckon it would give urgency to the upgrade plan.

The refinery is meant for upgrade at a cost of $400 million (about Sh32 billion) to enable it produce more white oil products such as cooking gas, jet fuel and petrol as opposed to its current state where it does more fuel oil, making it less efficient and profitable.

Already, the government has so far set aside Sh1.6 billion to help fund the upgrade with the balance expected to come from Essar Oil and commercial lenders.

“The upgrade project is now moving, with a review of the (dated) design premises.

Priorities will crystallise as Essar becomes more familiar,” said a senior executive at the firm who requested not to be named.

Last Friday, the board, at their first meeting since the entry of Essar, approved a number of projects linked to the upgrade.

Besides the upgrade, the board approved the construction of a 24 megawatt power plant to cut its reliance on Kenya Power and Lighting Company, a gas loading facility and injection of Sh160 million in fresh equity for the implementation of smaller projects.

It also approved the hiring of consultants to undertake studies and recommend the best configuration of the refinery and review both costs and viability of the project.

Mr Varma has vast experience in the Indian energy market that spans over 50 years and his posting would help the Indian giant increase its presence in the regional oil market.

On July 30, Essar announced that it would enter Kenya’s downstream petroleum market by acquiring assets belonging to the troubled Triton Petroleum Company that was placed under receivership last December.

Essar Energy is a fully integrated oil & gas company of international scale with strong presence across the hydrocarbon supply chain — from exploration & production to oil retail.

 
#17 ·
Toyota eyes investment in power generation

Toyota eyes investment in power generation
Toyota Tusho Corporation, which fully owns Toyota East Africa, has announced plans to invest millions of shillings in geothermal and wind power generating plants.

Toyota East Africa chairman Dennis Awori on Friday said that although the company is known for manufacturing motor vehicles, it plans the ratio of its automotive business to non-automotive to be 50:50 by 2015.

He told reporters in Nairobi that the power shortage facing the country called for both the government and private organisations to offer solutions. “We expect to be making substantial investment within a few months,” Mr Awori said.

“As for the amount, I will not be able to disclosure but given that we are talking about Toyota Tusho Corporation, a $67 billion turnover company, this will be a sizeable investment.”

The company plans to invest in geothermal, wind power and biofuel production. It will also invest in coffee and nuts production, Mr Awori said.

Toyota said the 2009 Total Motorshow will be held from August 28 and 30 at Jockey Club, Nairobi. “This offers visitors an opportunity to see and compare makes and models, providers and industry players at one place,” said Toyota East Africa managing director Tomonori Umehara.
desert burner is online now Report Post Edit/Delete Message
 
#20 ·
Oil drillers Raytec and Lion in merger

Oil drillers Raytec and Lion in merger

Oil workers at a storage facility for crude oil at Mangala oil field at Barmer in the desert Indian state of Rajasthan. Drilling in CNOOC’s Block No. 9 in Kenya is expected to start soon. Picture: Reuters

Posted Monday, September 7 2009 at 00:00

Publicly-listed Cnadian oil exploration company Raytec Metals Corporation has announced that it has entered into negotiations to merge with Lion Petroleum Inc — the entity that has been allocated the rights by the Kenya government to prospect oil in two blocks in Mandera area of North Eastern Province.

A recent entrant into the oil exploration field in Kenya, Lion Petroleum has production sharing contracts with the government of Kenya on blocks 1 and 2B.

The news of the intended merger is the latest in the fast-changing oil exploration landcape in Kenya in response to an increasingly liberalised licensing exploration regime.

Until recently, Kenyan authorities were reluctant to approve mergers and farm-ins between oil exploration companies.

But it would apear that authorities now realise that as along as the country constinues to be regarded as a high-risk exploration frontier, the licensing regime must allow mergers and acquisitions if only to sustain the continued flow of foreign venture capital into the country’s oil exploration sector.

Block 1 — which is the subject of the new merger deal between Raytec Metals and Lion Petroleum — covers an area of approximately 31,781 square kilometres and is situated west of Mandera Town, extending into Somalia and Ethiopia.

The merger will also affect ownership of Block 2B which covers an area of approximately 7,807 square kilometres and borders block 9 where Chinese exploration company CNOOC will shortly commence the drilling of Kenya’s first on-shore oil wells in close to 20 years.

Last week, the chief executive of Lion Petroleum, Mike Devji, said the two companies had decided to unite to create a bigger and more dynamic oil exploration company.

Last year, Lion entered into a farm-in agreement with East African Exploration Ltd, a subsidiary of Black Marlin Energy Ltd of Dubai, that has rights over Bloc 1.

Under the deal, Black Merlin will do seismic work on some parts of block 1 in exchange for shareholding.

In a statement last week, Raytec’s president, Brian Thurston, described the relationship with Lion Petroleum as strategic, adding that the company was focused on the company becoming a significant player in the developing oil and gas industry in East and Central Africa.

Only recently, Raytec announced a farm-in agreement with Africa Oil Corp, a member of the Lundin Group.
According to the agreement, Africa Oil will transfer to Raytec a 10 per cent interest in the Block 9 , a 25 per cent license interest in the Block 10A and a 20 per cent interest in Block 10BB.

In July, Africa Oil Corp acquired Turkana Energy Inc which had a production sharing contract on Block 10BB.

The block is approximately 13,000 square kilometres in North Rift.

The block occupies within the tertiary rift trend of East Africa, which has recently yielded major oil discoveries by operators such as Heritage Oil Corp and Tullow Oil plc, both active in the Lake Albert region of Uganda.

In the sate of Puntland Somalia, Africa Oil will transfer a 15 per cent licence interest to Raytec in the Nogal and Dharoor Petroleum Production Sharing Agreements.

In May, 2009, Dubai based Black Marlin Energy Limited announced a farm-in agreement between its subsidiary East African Exploration Limited and Africa Oil Corporation on where Africa Oil will transfer a 20 percent license interest in the Block 10A Production Sharing Contract, located in the Anza Basin of northern Kenya.

In June, Lundin Kenya BV, a wholly owned subsidiary of Lundin Petroleum AB, anncouned that it had executed an agreement with CNOOC Africa to acquire a 30 percent particpating interest in Block 9.

In December, Taiwan’s government-owned refiner CPC Corp and China’s CNOOC signed a letter of intent to expand exploration and production in which it agreed to sell to CPC a 30 per cent stake in its No. 9 exploration block in Kenya.

Drilling in CNOOC’s Block No. 9 in Kenya will take place in August or September, CPC president Chu Shao-hua said.
 
#21 ·
Refinery to set up own electricity plant to boost power supply

The Kenya Petroleum Refineries Ltd (KPRL) will set up its own power generation plant to guarantee reliable power supplies and cut electricity costs.
KPRL has been experiencing power outages that impacted negatively on production processes.
It attributed the hitch to irregular power supply from the Kenya Power and Lighting Company (KPLC).The firm blamed the recent fuel shortage across to irregular power supplies that affected production of premium petrol.
Though production has normalised, KPRL said prevailing conditions on the power sector demanded that it reduces its reliance on supply from KPLC.
"The power generation project is a high priority project due to the prevailing constraints in power supply.
The plan is to have it up and running in the least possible time, which will include the tendering, construction and commissioning of the project," said Martin Wahome KPRL Communications Manager. "Over the last 12 months, supply of power to KPRL has been irregular and this has adversely affected vital equipment.
National Grid
The dedicated power line to KPRL from KPLC has also not been very efficient.
To mitigate this, KPRL is looking at other options, including producing its own power," he explained. The projected output of the plant is 24 MW, while KPRL’s peak demand is about 8MW. It intends to sell the balance to KPLC on a Power Purchase Agreement (PPA) basis.
The Mombasa-based refinery joins a growing list of companies that have plans or are generating power for their consumption and selling excess capacity to KPLC.
The firms include Mumias Sugar Company, Athi River Miming, the East African Portland Cement and Kenya Tea Development Agency.
The plant put up by Mumias Sugar has a capacity of 38 MW and offloads 26 MW to the national grid.
ARM has said it will put up a 30 MW coal fired plant at the Coast region and expects to be up and running by end of 2011.
KTDA announced in July it would create an energy subsidiary to spearhead its energy generation initiatives among its factories.
Income streams
The move by the agency is expected to reduce money spent by tea factories on energy, and broaden their income streams.
The agency has also signed PPA with KPLC to supply surplus power from its Imenti mini-hydro project.
The project was constructed by small-scale tea and has a capacity of 1MW.
There are, however, ten other factories that have potential to generate a combined capacity of 24MW.
 
#22 ·
Sugar firms unveil power project plans

Government sugar firms are rushing to roll out electricity projects to take advantage of an array of tax incentives offered by Treasury to encourage investment in energy and improve their bottomlines.

The move comes ahead of privatisation later this month and the entry of Common Market for Eastern and Southern Africa (Comesa) duty free sugar two years later.

In the footsteps of Mumias Sugar Company, which is already supplying 26 megawatts to the national grid, at least two State-owned sugar firms —Sony and Chemelil —are finalising details of the cogeneration projects.

Sony Sugar has intensified its search for strategic investors to finance its cogeneration unit while Chemelil which entered into a cogeneration partnership with KenGen a while ago has formed a committee working out the technical and financial details of setting up a plant in Western Kenya.

Last week, both the KenGen and Chemelil spokespeople told the Business Daily the outcome of the collaborative committee is what is holding the two firms’ resolve to start the power generation project.

“Cogeneration is one of the value addition projects that our consultants have identified as reliable areas that will improve the revenue streams of our sugar industry in the era of duty-free Comesa sugar imports,” said Mr Solomon Kitungu, the CEO of the Privatisation Commission of Kenya.

The government has already contracted a consortium of privatisation advisors—led by consultancy firm Ernst and Young to provide technical advice on how heavily indebted public sugar firms can be restructured to make them competitive in a liberalised market and attract private capital.

Five State corporations— Miwani, Muhoroni, Sony, Chemelil and Nzoia —have been identified for privatisation after consistently failing to meet their current liabilities like paying for suppliers and cane deliveries.

Together, public sugar firms are groaning under a heavy debt of over Sh47 billion.

According to Mr Kitungu, the first public hearing of the privatisation process will be held in Kisumu on September 18 and stakeholders of the five targeted firms have been invited to make their contribution on the best way that the corporations can be restructured to make them profitable.

In the restructuring process, Mumias Sugar Company which invested Sh6.5 billion in a cogeneration is seen as a model in the industry that is bracing for the removal of the Comesa safeguards by 2012.

Renewable energy
Apart from direct revenue earned from selling the generated power to the national grid, the other benefit is the kind of dividends that await sugar firms that venture in renewable energy production came last week when Mumias released its 2008/2009 financial year.
The results indicated that the government also doled out an equivalent of 150 per cent of parastatal’s capital investment deduction in the form of tax credit, a concession that pushed up its after-tax profit by 33 per cent from Sh1.2 billion to Sh1.6 billion.

Data from the ministry indicate that six of the country’s 13 sugar firms which have a cogeneration capacity of up to 300 megawatts require a total of $4.45 billion to put up the plants — an investment that the government hopes to attract from its partnership with the private sector.

“The ongoing restructuring in the public sugar sector will private investors to take part in tapping the huge cogeneration opportunities available in the country in joint ventures with the public sugar companies,” said Mr Raphael Khazenzi, a senior energy ministry official in charge of the renewable energy development.

In an earlier interview, Agriculture minister William Ruto hinted at the government’s plan to reduce the number of sugar companies to six, each with a cogeneration capacity.

Ten years tax break, investment deduction and zero-rating of the imports of specialised materials used in the construction of the cogeneration plants are among an array of the tax incentives that the government has been dangling to entice the private sector to invest in the renewable energy projects.

“We are creating enabling environment to encourage projects in alternative sources of energy such as wind, solar, geothermal and use of biomass to generate electricity which represent a shift from over reliance on hydro power,” Mr Joseph Kinyua, the Treasury PS said in a statement read on his behalf at the Kenya Investment Authority’s Ecotape Preparatory meeting held in Nairobi last week.

Other renewable energy projects being pursued by the government includes wind power, solar, geothermal and power alcohol.

Mr Alexander Varghese, UNIDO representative for Kenya and Eritrea said renewable energy development will also provide the easiest way to support value addition in rural areas as envisaged in both the private sector development strategy and the vision 2030.

“Apart from cow dung, there are so many wastes in this country that can be used to generate ample amount of energy in the rural areas,” he said.

Mr Khazenzi said the government is already funding a research being undertaken by the Jomo Kenyatta University of Agriculture and Technology which seeks to study the possible use of sewage in producing biogas
 
#23 ·
Indian firm to put up power plant

Sanghi Group of India will put up a power plant to support its planned cement factory in Pokot district.

The facility, set to produce up to 22.5 megawatts of electricity, will be used when its Cemtech factory commences production by December of 2011.

The $80 million (Sh6 billion) cement plant will produce up to 1.2 million tonnes of the building material per annum.

Beat high cost

Sanghi power plant comes at a time when most cement companies in Kenya are putting up own electricity generation facilities to beat the high cost of energy in the country. Cement firms use up to 45 per cent of their running costs on power.

The Indian group, the world’s largest single-stream cement plant producing over 20 million tonnes of cement annually, owns an 80 per cent share of Cemtech with the balance held by local investors.

The Pokot project has permits and licences by the government including, the Environmental Impact Assessment license by the National Environmental Management Authority.

Local leaders have invited President Kibaki and Prime Minister Raila Odinga to officiate at its ground-breaking ceremony.

Mining rights

On Tuesday, director Rajesh Rawal said: “The company has successfully completed the in-depth geological evaluation exercise, which took nine months, at its limestone quarries for which it has been granted exclusive mining rights for 99 years by the County Council of Pokot.”

He revealed that Cemtech had already received hundreds of applications for jobs adding that construction of the factory will commence soon after the ground-breaking ceremony.

Industrialisation PS John Lonyangapuo confirmed that plans are underway to upgrade road network and a railway line to facilitate transport of cement countrywide and to neighbouring countries.
 
#24 ·
Five Nile States to interconnect electricity grids

A four-year interconnection of electricity grids in five Nile Equatorial Lakes countries including Kenya, has been launched.

The Sh152 million project will be implemented by the Nile Basin Initiative (NBI), Nile Equatorial Lakes Subsidiary Action programme (NELSAP) in collaboration with the African Development Bank (AfDB).

In Kenya, Lessos area in Nandi district is expected to receive 220 Kilo Volts (KV) with a 256km interconnection line from Bujagali Power Station in Uganda. The interconnection aims at creating a regional power network.

Other countries set to benefit from the programme slated to start at the end of next year are Burundi, Democratic Republic of Congo, Rwanda and Uganda.

Power exchange market

It is expected that the project will create a power exchange market among the five countries and lower the cost of electricity, Antoine Sendama, NELSAP regional co-ordinator said in a statement.

"The interconnection lowers the cost of power supply, ensures system stability, security of supply and optimises the use of energy resources." the statement read in part. Joseph

Sendama said the project will also update the feasibility study of the Lessos and Olkaria projects in the country.

Terer, the NBI project manager said besides providing electricity to rural areas to spur economic growth, the project is expected to ease the high costs of electricity.

Consultation with donors

Uganda’s Energy minister, Eng Simon D’ Ujanga launched the programme at the Grand Imperial Hotel in Kampala last week following a two-day meeting with officials from the five countries and the donors.

While each of the benefiting countries is expected to implement the projects falling under its territory, NELSAP will establish a co-ordinating and implementation unit at the regional level.

Tanzania will be linked to the regional electricity grid through a planned interconnection with Kenya in the north western part to Rusumo Falls Hydropower Project shared among Burundi, Rwanda and Tanzania.
 
#25 ·
Oil search gains momentum

Years after Kenya launched an off-shore oil exploration bid, multinational companies are still erecting rigs deep in the sea with the hope of striking the black diamond.

The latest entrant into the turbulent waters is Origin Energy (K) Limited, a subsidiary of Original Energy Limited, Australia.

The company is currently assembling a rig to explore Bloc L8 for oil and gas, 100 nautical miles east of Malindi.

The chief geologist in the Ministry of Energy, Mr John Omenge, told journalists at Eden Roc Hotel in Malindi on Thursday: “When you look at the zeal and enthusiasm displayed by these companies, you know it is not for nothing.”

Mr Omenge said there was a lot of hope that the companies would strike oil soon, and urged the relevant government departments to cooperate with the company so that it realised its objectives.

Huge reserves

He said Tanzania, which lies within the same Indian Ocean Basin as Kenya, had discovered huge reserves of gas, adding that it was almost automatic that the Kenyan Coast had similar reserves.

The Origin Energy (K) Ltd Company operations coordinator Neil Taylor said the survey and exploration programme could begin in November or December.

“It’s a US$ 10 million-dollar programme (about Sh760 million) that will take six weeks to complete,” said Mr Taylor, adding that a special ship for the job was expected in the country in the next few days.

Origin Energy has completed a similar survey in Bloc 9. The blocs have separate licences for exploration from the government and each covers about 700 square nautical miles. The company will use the 3D Sysmic Survey method for the study.

Environmental issues

Mr Taylor said environmental issues had been taken care of after the company held a meeting with environmental stakeholders earlier in the week.
“They survey will be carried out very carefully,” he said. “The process is designed in such a way that it does not interfere with the ecosystem.”

Mr Taylor raised concern over insecurity at the sea, but Malindi district commissioner Arthur Mugira assured the exploration company that tight security would be in place.


http://www.nation.co.ke/News/-/1056/660288/-/uncaro/-/index.html
http://www.nation.co.ke/News/-/1056/660288/-/item/0/-/wdthqgz/-/index.html
 
Top