(Ecofin Agency) - Kenya needs the oil price to be between $50 and $55 per barrel to exploit its reserves at a profitable level, a government official revealed.

According to the Principal Secretary at the State Department of Petroleum, Andrew Kamau, the country is to start small exports of crude for a pilot project next summer but the projects are not expected to generate profits.

Kenya has estimated recoverable reserves of 750 million barrels in onshore fields but it does not have a pipeline to transport its crude from the northwest to an export terminal on the east coast.

This pilot project is expected to be used to gather valuable information about the market for its crude and also for the development of some infrastructure, Energy Voice reports.

The oversupply in the global market has made oil majors to reduce global investment. Kamau said that Kenya would start transporting 2,000 barrels of oil per day down to the coastal port of Mombasa in June.

Tullow owns 50% and Africa Oil and A.P. Moller-Maersk each own 25% of the two blocks where discoveries were made in 2012.

Kamau added that the three partners and the government are to enter into a joint development agreement next week regarding the construction of an 891 km pipeline between the town of Lokichar and Lamu on Kenya's coast.

Martin Mbogo, the country manager for Tullow Oil, has said that the achievement of a full field production would most likely cost between $5 billion and $8 billion for upstream infrastructure and between $2 billion and $2.5 billion for midstream infrastructure.

Current oil prices would not prevent the long-term project and “the joint venture isn't about to walk away from Kenya,” Mbogo said.

Anita Fatunji