The Kenyan government has reported significantly reduced losses from its Early Oil Pilot Scheme (EOPS) due to a sharp rise in global crude oil prices. The project, initially projected to incur substantial financial shortfalls, now appears more viable as oil prices have climbed from Sh4,500 ($45) per barrel in 2016 to over Sh6,000 today.
The first batch of 200,000 barrels produced in Turkana and stored at Kenya Petroleum Refineries Limited (KPRL) facilities is expected to generate Sh1.3 billion ($13 million). This translates to an average selling price of Sh65 per barrel, aligning with current market rates for crude oil. Earlier estimates by the Kenya Civil Society Platform on Oil and Gas (KCSPOG) had projected production costs at Sh7,000 per barrel, suggesting potential losses of Sh1.4 billion for the 200,000-barrel batch.
KCSPOG’s 2016 analysis warned of potential losses under low-price scenarios. The organization’s report noted that at $46 per barrel, the project would generate only Sh3.4 billion in revenue, far below estimated costs of $63 million. Even with a $56 per barrel price—considered a best-case scenario at the time—the project would still face a shortfall. However, current prices have surpassed these projections, reducing the financial gap.
The study highlighted additional costs, including Sh220 per barrel for isotainer leasing, Sh1,050 for road transportation, and Sh225 for storage. These factors contributed to the original financial risks, but the recent price surge has mitigated some of these concerns.
