News

China and France to lend $163m for 5 drilling rigs in Kenya

KenGen Olkaria II plant, Kenya (source: constructionkenya.com)
Alexander Richter 30 Jan 2011

Chinese Export-Import Bank and the French Development Agency are planning to lend $163million to Kenya for the acquisition of 5 geothermal drilling rigs.

The Export-Import Bank of China and the French Development Agency are planning to lend $163m for Kenya to buy five drilling rigs, so a recent news piece by Bloomberg

“Exim Bank will provide $90million for three of the facilities and the French Development Agency $73m”. According to the article it is expected that the drilling rigs will be arriving in 2013.

With its extensive geothermal development plan the country expects to drill more than 550 wells within the next 10 years, at Olkaria, Menengai and Silali.

There are though critical voices about the acquisition of drilling rigs, e.g. on previously bought Chinese rigs. The same might apply now with financing for drilling rigs that are likely to come from China given the involvement of China’s Exim bank. The reason for this is that only having the rigs doesn´t help you being cost efficient. You also need the experience in drilling geothermal wells and there are doubts that the capabilities and technical know how isn´t there, at least yet.

It might be costly to start the drilling as the learning curve will be quit high and expensive, at the same time the savings in the long term might be worth it, but who knows for sure.

Source: Business Week