Africa Oil: low oil price won't cause major delay to Kenya project

By George Obulutsa
NAIROBI, Jan 21 (Reuters) - Falling world oil prices will
not cause a major delay to plans to begin oil production in
northwest Kenya, Africa Oil Corp's chief executive said
on Thursday.
Keith Hill said the biggest hurdle was finalising
construction plans for a crude oil pipeline.
Africa Oil and its partners aim to announce a final
investment decision for production in early 2017.
"The current oil price has indeed put pressure on the
project, but we do not believe this low price is sustainable. We
do not see a major delay to the project as a result of the oil
price, our biggest issue is getting the pipeline finalised,"
Hill said in an emailed response to questions from Reuters.
The pipeline will run from land-locked Uganda across
northwest Kenya to a planned port in Lamu, on Kenya's Indian
Ocean coastline.
Kenya and Uganda agreed to the route in August but they are
still working out details, including financing. Uganda has an
estimated 6.5 billion barrels of crude oil reserves.
Companies active in Uganda include France's Total TOTF.PA ,
Britain's Tullow Oil TLW.L and China's CNOOC
0883.HK .
Africa Oil and partner Tullow Oil first struck oil in
Lokichar in northwest Kenya in 2012. The recoverable reserves
are an estimated 600 million barrels of crude, which would feed
into the pipeline from Uganda when it is built.
Africa Oil and Tullow were 50-50 partners in blocks 10 BB
and 13T where the discoveries were made. Africa Oil has since
sold a 25 percent stake in those blocks to A.P. Moller-Maersk
MAERSKb.CO.
It has also sold a 25 percent stake in Block 10 BA to A.P.
Moller-Maersk.
Hill said the Africa Oil was still actively exploring
despite the low oil price.
On Thursday, crude oil futures hit their lowest levels since
2003, as investors worried over glut of crude at a time of
slowing global demand, especially from China.
Oil prices have fallen over 75 percent in 18 months.