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This research report was prepared by the Research Department of Old Mutual Securities Limited. Old Mutual Securities Limited is a securities trading company licensed by the Capital Markets Authority (Kenya) for the purpose of facilitating trade on the Nairobi Securities Exchange.

Here are our views on the news making headlines today for Kenya:
Oil pipeline design out as Kenya eyes exports in 3 years. Kenya is eyeing its first crude exports by 2018 after Japan’s Toyota Tsusho completed the feasibility study and design of an oil shipment pipeline estimated at USD4 billion (KES 388 billion) from Uganda to Lamu.

Our View: This augurs well for the economy as Kenya is set to earn up to KES 360bn each year from oil exports, as government expects the oil reserves to be monetized by 2018.However a key risk to this is the heightened worries of possible future slowdown in Exploration & Production activities driven by the current drop in the global oil and other mineral resource prices. In recent years, the U.S. has tripled its shale gas extraction rate from about 5% to 15% while Saudi Arabia has opted to maintain its production capacity amid falling crude oil prices a move which may witness a prolonged slump in international oil prices.
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