Kenya pipeline boosts oil-storage capacity by 22% with tanks

NAIROBI (Bloomberg) -- Kenya Pipeline Co. will spend 5.3 billion shillings ($52 million) building four new tanks that will increase its storage space by more than a fifth, Managing Director Joe Sang said.

KPC is adding capacity to meet growing demand for fuels in East Africa, the continent’s fastest growing sub-region, according to the African Development Bank. The additional tanks will accommodate increased volume from a new pipeline being built from the port of Mombasa to the capital, Nairobi, that will be completed in April, Sang said in an interview Friday.

“The project will enhance operational flexibility, capacity of product receipt and evacuation of product in Nairobi once the new Mombasa-Nairobi pipeline is operational,” he said.

The tanks will be built in Nairobi by May and each hold 33.4 MM liters, increasing the state-owned company’s capacity to 745 MM liters from 612.3 MM liters. The Nairobi-Mombasa pipeline, known as No. 5, will have a 20-in. diameter and replaces an existing 14-in. conduit.

Kenya’s strategic petroleum reserves will triple to 90 days once the new tanks are commissioned and when an old refinery in Mombasa, which is now being used as storage, is refurbished, Sang said. Increased storage capacity will also save fuel-importers demurrage charges they’ve been incurring as vessels wait at the Mombasa port to discharge fuel into KPC’s system, he said.

Kenya distributes fuel to neighboring countries including Uganda, Rwanda, Burundi and eastern Democratic Republic of Congo. KPC is currently building an oil jetty on Lake Victoria to improve the reliability of its supplies.