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Kenya delays signing LNG deal with Qatar on domestic gas discovery

Nairobi — Kenya is delaying signing an agreement on importing LNG from Qatar due to the discovery of 1.8 Tcf of gas in onshore block 9.

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Energy Cabinet Secretary Davis Chirchir told Platts by telephone Monday that the signing of a deal for Qatar to supply 1 million mt of LNG a year to fire a planned 700-MW power plant in Mombasa was being delayed.

He said the government was looking at ways of optimizing the use of the gas found in the middle of last year by Africa Oil Corp. at the Sala-1 well in block 9 in northeastern Kenya before making a commitment to import LNG from Qatar.

"We have to be careful not to rush. You do not want to commit yourself say for 10 years and find your own gas can not find a market," he said. Africa Oil and Marathon Oil Corporation, each own 50% of the onshore block 9.

"The plan is to transform the natural gas Africa Oil and Marathon Oil Corporation discovered to power in the next nine to 15 months to add an additional 200-500 MW to the national grid," Chirchir said.

Kenya plans to build in Indian Ocean port city of Mombasa at Dongo Kundu 700-MW plant to use LNG from Qatar to contribute to generation of additional 5 GW by 2017 to reduce cost of electricity to about 7 US cents/KWh.

The building of the Dongo Kundu 700-MW gas plant entails the construction of a floating storage re-gasification unit to supply gas to other electricity generating plants in Mombasa currently fired by diesel.

Kenya Pipeline Company in April 2014 signed a non-disclosure agreement with Qatar Gas to negotiate the supply of 1 million mt/year of LNG when President Uhuru Kenyatta visited Qatar.

--Kennedy Senelwa,
--Edited by Jonathan Dart,