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Kipevu Oil Refinery Eyes Major Expansion Project

XINHUA
NEWS SERVICE
REPORTS FROM THE
AFRICAN
CONTINENT

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Kipevu
Oil Refinery Eyes
Major Expansion Project

The
plant upgrade is geared towards achieving
greater operational efficiency at the refinery

MOMBASA
(Xinhua) —
East Africa’s sole refinery,
the Kenya Petroleum Refineries Limited (KPRL), is
considering a mixture of financing models to undertake
a multi-billion-dollar engineering re-design of its
plant in Mombasa, to handle more complex operations in
future, company executive said on Wednesday.

KPRL
CEO Brij Mohan Bansal said the firm’s Board of
Directors is due to meet to approve a
1.2-billion-U.S.-dollar refinery facility upgrade and
a new engineering design that will enhance the
facility’s crude oil refining capacity within the
next three years.

The
plant upgrade is geared towards achieving greater
operational efficiency at the refinery because this
will enable it to blend crude oil from cheaper sources
to produce high-grade refined oil.

“When
the board approves the new engineering design, we
will begin to arrange funds. This process could take
up to 12 months, including the award of the tender
before the start of the upgrade,“ Bansal
disclosed.

The
refinery is to identify a banker or a fun-raiser for
the upgrade of the facility. The facility refines 40
percent of
Kenya
’s processed oil products.

The
firm is due to commission a 9.2 Megawatt power plant,
running on fuel oil, to help in dealing with
interruptions that often occur when electricity goes
off, leading to system failures and short-circuiting
equipment.

The
17-million-dollar facility is currently undergoing a
pre-launch run in readiness for its official opening
in November.

Bansal
said it will enable the refinery to remain
sufficiently reliant on its own energy and the surplus
will be sold to other users within the oil industry.

“We
are also installing new pump facilities to be able
to pump more refined oil to the Kenya Pipeline
Corporation (KPC) to enhance more efficiency in the
oil industry,” the CEO said.

“We
are using a mixture of debt and equity financing for
the upgrade,” Bansal said.

Once
the process is complete, the firm expects foreign
lenders to the funds to enable the expansion and
upgrade of the facility to kick start. 

“We
are ready to commission the new power plant this
month. All the benefits that we expect to gain as a
result of these operational efficiencies would be
passed on to the Exchequer,” Bansal said.

The
refinery is owned on a 50-50 basis between the Kenyan
government and
India
’s Essar Energy.

It
recently shifted from a toll-refinery, raising its
operational revenue by charging oil marketing firms
for the cost of refining crude oil, to a merchant
refinery, which owns the crude oil it refines.

“The
constant power failures is a safety issue on the
lifespan of the equipment at our facility,” said
John Mruttu, the General Manager at the Refinery,
which currently handles 4,000 tonnes of crude oil
daily.

Mruttu
said the refinery was currently taking steps to bring
its production capacity to the best possible standards
compared to other refineries, noting that while the
rate of power blackouts has reduced by half from 60 to
about 30 this year, there are chances of improving the
facility further.

KPRL
runs two processing units but the second unit has been
idling due to the need for more efficiency in the
processing of the crude.

Bansal
said the idling of the second crude oil processing
plant was meant to create more operational efficiency
and cut on the production costs.

“The
situation should normalize in a month and normal
operations would resume but we are currently able to
achieve 133, 000 tonnes of crude oil per day, which
is efficiency gain,” Bansal said.

 

Remember:
you read it first at coastweek.com
!

 

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Article source: http://www.coastweek.com/3540_01.htm

Short URL: http://refinerynews.com/?p=49083

Posted by on Oct 5 2012. Filed under Companies. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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