Kenya hires US company to find cheaper sources of liquefied gas

The Kenyan government has hired a US company, K&M Advisors, to conduct a feasibility study for gas power generation in Mombasa County.

The move follows the country’s desire to reduce its reliance on Dar es Salaam for liquefied petroleum gas (LPG), as a result of which the Tanga plant in Mtwara has served nearly half of the Kenyan market transported through the Namanga and Holili border posts.

Although Kenya and Dar sign an agreement to start work on a gas pipeline from Dar es Salaam to Mombasa as part of a long-term energy resource sharing project, Kenya remains open to other options, including importing the raw material.

That means the agreement between Kenya and Tanzania may be annulled if the company recommends cheaper ways of using natural gas to generate electricity. The US corporation said Kenya will choose the cheapest option as it tries to develop a liquefied natural gas (LNG) import terminal in Mombasa.

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“K&M Advisors was commissioned by Kenya Electricity Generating Company PLC (KenGen) on behalf of the Kenyan government and the country’s energy sector to conduct a feasibility study for electricity generation from natural gas in Kenya. The feasibility study will examine the technical, economic, financial, and environmental and social feasibility of the project, ”said K&M Advisers in a statement.

The study examines the potential to create a domestic natural gas market for electricity generation and industrial use through imports with the aim of diversifying the country’s energy mix, improving energy security, lowering electricity costs and reducing greenhouse gas emissions.

The study, which is divided into 17 tasks and carried out over a period of 12 months, examines the technical, economic, financial, ecological and social feasibility of the project. It includes the development and operation of an LNG import terminal in Mombasa as well as the conversion of the 10 existing power plants for heavy fuel oil (HFO) and kerosene in Kenya to natural gas.

K&M will begin assessing LNG needs from converting existing power plants to natural gas, building a new power plant, and relocating the HFO or diesel consumption industries, and will then identify and cost viable LNG procurement, shipping, import terminal logistics and transportation options. Various locations of LNG import terminals in Mombasa; floating and onshore configurations are also analyzed.

K&M will examine whether natural gas obtained from an LNG import terminal in Mombasa could produce electricity at a lower cost than HFO or kerosene. The transport of LNG with trailers or by rail is also considered.

The study reviews contractual arrangements for carrying out the project, including contracts for the extraction of LNG or gas from power plants. LNG or gas transport, development and operation of LNG import terminals and LNG delivery from ship.

The US team will also analyze how the various components of the LNG supply chain can be competitively sourced. At the same time, K&M Advisors will evaluate the feasibility of converting the existing HFO and kerosene plants to natural gas and the construction of a greenfield natural gas plant.

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