KPC leases KPRL’S facilities as part of wider expansion plan

By Claire Wanja

Kenya Pipeline Company (KPC) has entered into a 3-year leasing agreement with the Kenya Petroleum Refineries Limited (KPRL).

Under the leasing agreement, KPC will manage KPRL’s existing storage facilities with the two state companies lending their technical expertise and assets towards the realization of the government’s early oil program.

Energy Cabinet Secretary Charles Keter said the lease agreement will enable the country shore up its strategic petroleum reserves from the current low of 12 days to 30 days with plans underway to increase the reserves to three months.

‘KPRL has both storage facilities and grounds that will be used to increase the country’s ullage which will in effect create enough capacity for birthing vessels to discharge fuel into KPC’s system. Over time, this will see Kenya save billions of shillings incurred in demurrage charges every year for fuel vessels docking at the port of Mombasa, a factor that could significantly reduce the cost of fuel. In addition to this, the government is looking to invest in LPG facilities on KPRL’s grounds with over 309 acres of land available at its Changamwe facility.’ CS Keter added.

Currently, the country lacks a common user import terminal under the control of the government for LPG since there are no government-controlled storage facilities for LPG.

During the signing ceremony at the Energy ministry headquarters attended by KPC and KPRL top management, KPC Managing Director Joe Sang said the deal between the two companies will open up opportunities for investment and job creation as KPC seeks to convert and expand KPRL’s facilities.

“All existing KPRL staff will be seconded to KPC as employees with their technical expertise remaining crucial to the realization of the government’s early oil program. KPC will convert KPRL’s facilities in preparation for the export of crude and as a result we expect to not only retain existing staff, but also create additional job opportunities in the coming days.’ Mr. Sang said.

KPRL’s Chief Executive Officer Charles Nguyai said the deal will enable the country leverage the refinery’s underutilized infrastructure as well as build capacity towards the realization of the early oil program.

“KPRL stopped refining oil in 2013 and has been underutilized as a storage facility. The deal between KPRL and KPC will ensure that the facility is fully utilized while at the same time enabling both companies to combine their expertise and resources to manage the receipt, handling and export of crude oil.’ Mr. Nguyai said.

KPRL has 45 tanks with a total storage capacity of 484 million litres of which 254 million litres is reserved for refined products while the remaining 233 million litres is reserved for crude oil.

On its part, KPC has seven storage depots with a total capacity of 612 million litres and is currently constructing four additional tanks at its Nairobi Terminal with a combined capacity of 133.5 million litres.

Besides guaranteeing security of supply of petroleum products, the additional capacity will enhance KPC’s operational flexibility and increase tank turnaround at KPC’s Kipevu Oil Storage Facility (KOSF), resulting in more ullage creation and a reduction in demurrage charges.