By Nerijus Adomaitis
OSLO, March 2 (Reuters) - Companies developing Kenya's first oilfields expect to conclude agreement on construction of an export pipeline by the middle of this year, according toToronto-listed Africa Oil AOI.TO, one of the partners.
Oil could account for about a tenth of Kenya's government revenue, on par with its biggest current export, tea, once production reaches its peak, officials say. Production is expected to start around 2021-2022. Tullow Oil TLW.L , which struck oil in Kenyasix years ago, and its partners proposed in January to transport oil from the land-locked Amosing and Ngamia fields via pipeline to the Indian Ocean port of Lamu 750km away.
"We've got two pipeline companies bidding ... Sometime before mid-year we expect to come to an agreement," Africa OilChief Executive Keith Hill told an industry conference.
"We are discussing with a couple pipeline companies about coming in as a strategic partner on the pipeline," he later told Reuters without naming the companies.
Tullow said in its 2017 annual report that the initial development stage will target about 210 million barrels of oil out of total 560 million of proven and probable reserves, with daily plateau production of 60,000-80,000 barrels per day (bpd).
Production could potentially increase to 100,000 bpd ormore, Tullow added.
Tullow estimates gross capital expenditure for the first stage to be $2.9 billion, including $1.1 billion for the pipeline. said the partners were aiming to approve project's final investment decision (FID) in the second half of 2019.
Tullow has said it would seek to reduce its stake from 50percent once the FID decision is reached. Oil, which has previously sold part of its stake toMaersk Oil, was not looking to divest more, Hill said.
"We are getting more comfortable and staying to be aproducer in Kenya ... We are not looking to sell," he told theconference.
French oil major Total TOTF.PA won Kenya's approval inJanuary to acquire stakes in the Tullow-operated blocks fromA.P. Moeller-Maersk MAERSKb.CO after committing to thepipeline's project. year Kenya lost a bid for a pipeline to carry crude oilfrom neighbouring Uganda, which could also have been used totransport oil from Kenya's fields. (Editing by David Goodman)