Kenya’s government is in talks with Beijing over development of a multi-billion dollar port and transport corridor that could provide a new export route for Chinese oil in southern Sudan.

The cash-strapped Kenyan government opened negotiations with Qatar over a potential $3.5bn investment in the port project late last year in return for a lease on 40,000 hectares of land to grow crops. But no deal was struck and Raila Odinga, the Kenyan prime minister, indicated to the Financial Times that he now viewed China as better suited to the project.

“The Chinese offer the full package,” he said, referring to the combination of financing and technical expertise that state-backed Chinese banks and construction companies have rolled out across Africa.

A Kenyan delegation led by Mr Odinga flew to China late on Wednesday for talks on the project involving the construction of a port in the popular tourist area of Lamu, and road and rail links to Kenya’s borders with Ethiopia and southern Sudan.

China’s engagement with the continent has gathered pace in recent weeks as it has pursued a multi-billion dollar deal for oil, mineral resources and infrastructure in Guinea and a bid for up to 6bn barrels of Nigeria’s oil reserves.

Kenya does not have the proven mineral resources that have attracted Chinese companies elsewhere. But China has extensive oil interests in neighbouring Sudan, it is an important lender to states such as Ethiopia and Chinese contractors are gaining a dominant position in public works projects across East Africa.

CNOOC, one of China’s big three state-owned energy groups, will start prospecting for oil in a block in northern Kenya by the end of this month, Kenya’s energy ministry said this week. It also has exploration rights for a second block in the Lamu basin.

The Lamu port and the road and rail links – dubbed Kenya’s “second corridor” – would kick-start the development of northern Kenya and accelerate economic growth in connected parts of Ethiopia and Sudan.

It could also provide an alternative route for oil out of southern Sudan, a semi-autonomous region due to vote on independence from the Khartoum regime in a referendum in 2011.

The Kenyan government confirmed that talks with China were ongoing but said: “We are open to any interested parties.”

The Chinese embassy in Nairobi said Kenya had requested China’s help.

* This article was originally published in the Financial Times on 14 October 2009