Kenyan officials said on Thursday that they were not aware of South Sudan's talks on the construction of an oil refinery with Ethiopia, but said Juba was carrying out feasibility studies before deciding where to locate the plant.
"They (South Sudan) are looking for the cheapest route to export their oil," Patrick Nyoike, the Permanent Secretary of the Energy Ministry, told journalists on the sideline of East African Upstream Summit, staged by the Petroleum Institute of East Africa.
South Sudanese Foreign Minister Nial Deng Nial held talks with Ethiopia's Foreign Minister Berhane Gebrekristos in Addis Ababa on Wednesday, where the South Sudanese FM said his country was looking for ways of enhancing economic cooperation.
The two sides said they would build a joint refinery and South Sudan would formally purchase hydroelectric power from Ethiopia.
Kenyan officials said talks with South Sudan on the terms of hosting such a refinery were still continuing.
"They have reviewed the intergovernmental agreement. We will review the host country agreement. There is an agreement between Kenya and South Sudan and Kenya to invest in the refinery," Nyoike added.
Kenya, Ethiopia and South Sudan signed a tripartite agreement in Kenya for the construction of the Lamu Port Ethiopia-South Sudan Transport Corridor (LAPPSSET) infrastructure project, which is expected to cost 25 billion U. S. dollars.
South Sudan prioritized the construction of the regional infrastructure project, which aims to create a seamless regional rail, road and port facilities across the region.
South Sudan, which ordered an oil export shutdown after a disagreement with Sudan over the terms of using the oil exportation facilities in the north, signed an agreement with Kenya for the construction of an oil pipeline.
Kenya has East Africa's sole oil refinery which produces refined oil products for export across the East African region.
However, the Kenya Refineries Limited (KPRL) is preparing for a 1.2 billion dollar facility upgrade.
John Mruttu, the KPRL's chief operations officer, said in Nairobi that "we are looking at a major upgrade. Once this is achieved, we would be able to achieve a substantial substitute of imported refined products."
The Kenyan firm has also been planning the construction of a major grease production facility to meet the local demand for machinery and other local firms.