Kenya: KPRL Plans Refinery Investment

Kenya Petroleum Refineries Ltd (KPRL), an equal joint venture between  Essar Energy and the Kenyan government, has hired Standard Chartered Bank to advise it on a plan to more than double its output to 80,000 barrels per day (bpd).

 The bank will undertake a feasibility study for the capacity expansion. The refinery’s current production is 32,000 bpd. The expansion will also include modernization of the Mombasa-based refinery. According to local reports, Standard Chartered Bank will act as KPRL’s financial adviser and will be responsible for structuring the transaction and raising the financing for the project.

Currently, the KRPL facility refines crude for state-owned oil marketing companies in Kenya using old technology that produces heavy fuel oil. The existing configuration and technology of the 50-year-old refinery limits its ability to produce more high-value petroleum products for the Kenyan market.

Apart from increasing production of higher value products, the proposed expansion will build captive power and water desalination facilities. The upgrade will also reduce the cost of refining oil and increase the amount of liquefied petroleum gas produced locally. KRPL will also be able to compete with refineries in West Asia and other parts of the continent and will look to sell its products in East African countries as well.

In 2009, Essar Energy purchased a 50% stake in KRPL from Royal Dutch Shell Plc, BP Plc and Chevron Corp. as the Kenya government sought to fast-track the modernization of the facility. The move was part of Essar Energy’s global expansion plan.

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