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Refining in Kenya

Kenya at a Glance

9/18/2012

Official Name: Republic of Kenya Capital City: Nairobi Official Languages: Kiswahili and English Official Currency: Kenya Shilling Main Religions: Protestant, Catholic, Muslims, Hindu, and Traditional Beliefs Area of the Country Water 11,230 Sq. Kilometers National Parks 25,334 Sq. Kilometers Others 546,082 Sq. Kilometers Total 582,646 Sq. Kilometers Major Towns include: Nairobi, Mombasa, Nakuru, Eldoret and Kisumu Major rural population areas include central, western and rift valley

KPRL History cont… • ESSAR committed to invest US$ 400m in an upgrade to double capacity

from 40,000 to 80,000 bbls per day and increase LPG production from 30,000 to 120,000 tons per year

• Kenya government put together an upgrade program to cost US$900 million, to be financed jointly by ESSAR?/Government and a consortium of commercial banks

• The upgrade project failed mainly due to lack of support from local oil marketing companies

• Discovery of oil and gas in Uganda and later, Kenya, changed the petroleum industry dynamics in East Africa

9/18/2012

Capacity vs demand Y E A R

Products 2004 2005 2006 2007 2008 2009 2010 2011 2012 Jan- Sept. 2013

Avgas 2,462 2,763 2,752 2,999 3,380 2,007 2,672 2,812 1,803 1,682

Jet A-1 675,930 710,670 751,927 808,363 705,705 740,211 747,841 889,251 851,300 521,477

Premium Gasoline

376,034 383,267 429,900 438,545 417,794 542,856 633,397 740,644 896,840 791,584

Regular Gasoline

86,453 81,258 79,056 73,241 61,033 55,158 56,953 40,388 13,561 865

Kerosene 305,825 389,607 364,234 329,853 285,003 374,945 323,441 340,603 400,794 288,192

Gas Oil 948,066 1,052,581 1,221,373 1,370,126 1,429,838 1,675,577 1,583,718 1,769,029 1,883,034 1,513,301

Industrial Diesel

30,787 29,623 45,292 47,007 30,344 23,897 26,570 32,291 24,020 18,588

Fuel Oils 472,107 586,661 713,702 674,809 600,999 590,944 570,232 637,417 422,664 258,322

LPG* 41,884 48,827 64,639 74,017 78,030 59,773 63,779 62,499 63,823 45,478

Bitumen* 8,262 11,650 14,634 16,677 17,733 12,405 7,761 10,521 5,047 445

Lubricants 36,508 30,965 39,336 33,074 32,675 26,514 30,970 43,292 39,888 26,273

Greases* 604 1,206 3,775 3,130 2,431 1,429 1,069 655 250 11,810

TOTAL 2,984,922 3,329,078 3,730,620 3,871,841 3,664,965 4,105,716 4,048,403 4,569,402 4,603,024 3,478,017

9/18/2012 (Units in M3 * Units in Metric Tons, Source Petroleum Institute of East Africa, Pipecor)

Sales of petroleum products in Kenya, steady increase in demand

Demand

9/18/2012

New motor vehicle registrations: growth over the last 4 years

Thermal power generation

9/18/2012

• Kipevu thermal power station in Mombasa has a capacity of 115MW generating capacity using 6 Diesel generators fuekl fired on HFO (heavy fuel oil)

Aviation & construction

9/18/2012

• Demand for products arising from major infrastructural development projects, such as the LAPSSET corridor

• Kenya as a transit hub: Kenya Airways ferried 3.6 million passengers to 56 destinations in 2013

Refining capacity

9/18/2012

CRUDE OIL INTAKE % Murban 815,489 100.8 SLOPS (6,472) (0.8) TOTAL 809,017 100.0

PRODUCTS YIELD % Liquefied Petroleum Gas 13,777 1.7 Unleaded Regular Gasoline 5,907 0.7 Unleaded Premium Gasoline 91,067 11.3 Dual Purpose Kerosene 183,428 22.7 Automotive Gas oil 179,487 22.2 Industrial Diesel oil 12,992 1.6 Fuel Oil 125 cst 4,166 0.5 Fuel Oil 180 cst 157,273 19.4 Low Sulphur Fuel Oil 180 cst 86,284 10.6 Tops* 38,001 4.7 Naphtha* (2,702) (0.3) Bitumen (1) (0.0) Fuel & Loss 39,407 4.9 Additives (69) (0.0) TOTAL 809,017 100.0

(Units in M3 * Units in Metric Tons, Source Petroleum Institute of East Africa, Pipecor)

• During Jan-Sept 2012, the refinery processed 809,017 Metric Tons of crude oil (annualizes to 1,078,689 MT)

• The refinery’s crude oil intake, product output and additives usage for the same period were as shown in the tables

Average output was approx. 22,000 bpd, against installed capacity of 70,000 bpd

Kenya Vision 2030

9/18/2012

• The national long-term development blue-print to transform Kenya into a newly industrializing, middle-income country providing a high quality of life to all its citizens by 2030 in a clean and secure environment.

• Vision comprises of three key pillars: Economic; Social; and Political

• Economic Pillar aims to achieve an average economic growth rate of 10 per cent per annum and sustaining the same until 2030

• LAPSSET comprising a new road network, a railway line, oil refinery at Lamu, oil pipeline, Isiolo and Lamu Airports and a free port at Lamu (Manda Bay) in addition to resort cities at the coast and in Isiolo is a major Vision 2030 flagship project

LAPSSET Corridor

9/18/2012

Bilateral agreements

9/18/2012

• On 24th January 2012 The Government of the Republic of Kenya and the Government of the Republic of South Sudan signed a Memorandum of Understanding (MoU) to establish the framework for cooperation for the construction of Kenya - South Sudan Oil Pipeline.

• The Government of Kenya and the Government of the Federal Democratic Republic of Ethiopia signed a Bilateral Agreement on 1st March 2012 on the development and management of Lamu – Moyale - Addis Ababa Railway Line.

Recent discoveries

9/18/2012

Resource inventory continues to be upgraded as discoveries continue to be made

Resource estimates

9/18/2012

• South Sudan has 5 billion barrels in the Muglad and Melut Basins

• The Lake Albert discoveries in Uganda contain 1.7 Billion barrels

• Kenyan discoveries so far exceed 600 million barrels

• Potential for further discoveries exists

Way forward?

9/18/2012

• Discoveries in East Africa happening too fast to allow the region adopt collective response to infrastructure requirements

• After the lake Albert discoveries, The EA Community commissioned a study in 2008 that recommended the setting up of a 60,000 bbl capacity refinery in Uganda

• The study also recommended the upgrading of the Mombasa refinery

• In 201, Kenya recommended the establishment of a 200,000 bbl refinery in Lamu as part of the LAPSSET project to process

• With the recent discoveries in Kenya, there is a proposal to move the planned refinery to Isiolo in central Kenya to serve the inland market as well as export markets of Southern Ethiopia and Somalia

• The Mombasa refinery would be left to handle Ugandan and Kenya crude if it can deal with the qualities, serving coastal demand and export markets

• There have also been proposals to covert the Mombasa refinery into a purely storage facility