The Kenyan government has signed an oil data exchange deal with Sudan that will enable the two countries share information on oil exploration prospects, senior Kenyan official said here Wednesday.
Kenya's Energy Minister Henry Obwocha told a two-day international investors conference for southern Sudan that Kenya is among countries that now want to tap the oil resources in southern Sudan with the possible establishment of a Port in Lamu, through which oil from Sudan can be shipped to other countries.
"I am glad to note than a Memorandum of Understanding to this effect already exists between the governments of the Republic of Sudan and Kenya and what remains is to put in place modalities for its implementation," Obwocha said.
The country's refinery in the port city of Mombasa does not have the capacity to refine oil from Southern Sudan unless it is upgraded.
Obwocha who was speaking at a Southern Sudanese investment forum however said proposals have been made to build a new oil refinery in Mombasa that will enable the country build up its capacity in processing oil products.
He said the new move may also fast-track the building of an oil pipeline between Lamu and Kapoeta Port in the southern Sudan.
Under a landmark peace deal signed in Kenya last year that ended more than two decades of civil war pitting southern rebels against the Khartoum government, oil revenues are split roughly 50- 50 between the north and south.
Although the south has complained it has yet to receive its cut, the World Bank's lead economist for Sudan, Jeni Klugman, said it was projected to receive up to 1.3 billion U.S. dollars in oil money this year.
Up to 500,000 barrels of crude oil is produced every day, mainly from fields in the south with output forecast to rise by 150,000 barrels per day this year.
But the Kenyan minister said the discovery of oil in the Sudan alongside the discoveries of gas in Mozambique and Tanzania has helped to upgrade the petroleum prospect of the East African region.
"The level of interest by investors in the upstream sub-sector continues to rise. This increased level of interest is not only demonstrated by a remarkably high number of applications for exploration opportunities by oil companies, especially Kenya, Tanzania, Mozambique and Madagascar, but also by drilling activity being undertaken," Obwocha said.
He said the increased interest in Africa's oil deposits has seen international oil firms acquiring exploration acreage throughout the continent.
He called on Kenya and Sudanese governments to put in place legal and fiscal regimes in order to attract investors into the region.
The Kenya Pipeline Corporation (KPC) announced plans to upgrade its infrastructure to deliver crude oil efficiently to neighboring countries including southern Sudan.
"The crude oil pipeline will provide an alternative source of petroleum for both Kenya and the Great Lakes region and consequently reduce dependence on imports from the Middle East. It will also increase the security of supplies of petroleum products to the region," said KPC Managing Director George Okungu.
Okungu told foreign investors that the extension of oil pipeline from the western Kenyan town of Eldoret to southern Sudan will provide the shortest route for the vast region's oil to the market and thus help in boosting the economy of the southern Sudan.
"The Kenya-southern Sudan oil pipeline will ensure security if supplies to the East and Central Africa region and provide alternative to the oil form Middle East," he said.
Analysts said if the project goes through, the extension will result in a significant reduction in the price of oil products in Uganda, Rwanda and the eastern Democratic Republic of the Congo, all of which import refined oil products through Kenya.
The war restricted appraisal of Sudan's oil fields but experts estimate there are at least hundreds of millions of barrels of recoverable reserves in the south.