Kenya's coal/fuel oil substitution potential: implications to dependence on imported oil and to the economy's adjustment capability

Abstract

This study seeks to investigate coal/fuel oil substitution potential in Kenya and to assess the implications of the potential both to the dependence on imported crude oil and to the capability of the economy to adjust orderly in response to a possible fuel oil supply deficit which may result from depending on heavy crude as well as from increasing demand for light crude oil products are assessed.

This paper, which is based on the initial research proposal, presents the problem under study in a conceptual framework. Relevant concepts, facts, and theories as well as, relationships among them and their bearings on the problem have been identified and discussed. However, the levels of significance of the relationships and the bearings can only be addressed at later stages of this research.

The nature of the information and date required are perceivable from the body of this paper. However, they are more explicitly presented in form of a questionnaire which is attached as appendix I. Briefly, they relate to the following (I) coal supply situation: (2) crude oil supply situation; and (3) substitution feasibility factors.

Three observations may be, briefly, made regarding some important considerations underlying the problem under study. The first is that regarding coal/fuel oil substitution per se (as applies to other inter-fuel substitution) the issue, traditionally, originates from demand management requirements, on the supply side of energy system. Kenya may be subjected to coal/fuel oil substitution which is necessitated by changes in crude oil quality, the extent of which depends on factors relating to: future crude oil product demand as well as energy, demand pattern and trends; refinery technology; and rate at which the crude oil quality would change. Contrary to some people's beliefs, the current domestic fuel oil supply/demand situation may only be a necessary, but definitely not a sufficient, basis for evaluating the extent to which the country is likely to be subjected to this type of substitution. Neither would a partial dynamic, analysis of the supply/demand situation provide an adequate basis. Changing crude oil characteristic adds a new dimension to the issue of coal/fuel oil substitution which calls for use of a system dynamic analysis approach.