Energy ministry officials from Kenya and Uganda will meet on March 23 to resolve outstanding issues pertaining to the earlier agreed-on proposed Hoima-Lamu pipeline.
Kenya is seeking to salvage the proposed project to counter the building of a similar pipeline from Uganda to Tanzania’s Tanga port following an announcement by Presidents John Magufuli of Tanzania and Yoweri Museveni of Uganda early this month that the two countries had agreed to construct a southern route pipeline from the Albertine basin in western Uganda to the port of Tanga.
Rivalry for the project is expected to escalate as both Dar es Salaam and Nairobi make sweetheart offers to host the pipeline.
Energy ministry officials from Kenya and Uganda will meet on March 23 to resolve outstanding issues pertaining to the earlier agreed-on proposed Hoima-Lamu pipeline.
Kenya’s Petroleum Principal Secretary Andrew Kamau said the government will address matters touching on the security of the proposed pipeline, guarantees for financing, transit fees chargeable and the lowest cost tariff applicable to the facility.
“Kenya and Uganda last year signed a memorandum of understanding on the pipeline detailing certain conditions. We are working on a meeting between the two countries to resolve the issues,” he said.
Kenya is seeking to salvage the proposed project to counter the building of a similar pipeline from Uganda to Tanzania’s Tanga port following an announcement by Presidents John Magufuli of Tanzania and Yoweri Museveni of Uganda early this month — on the sidelines of the East African Community Heads of State Summit held in Arusha — that the two countries had agreed to construct a southern route pipeline from the Albertine basin in western Uganda to the port of Tanga.
The project will commence in August and take three years to finish at a cost of $4 billion.
At stake are transit fees and port handling charges for Uganda’s 6.5 billion barrels of crude oil when production commences.
Rivalry for the project is expected to escalate as both Dar es Salaam and Nairobi make sweetheart offers to host the pipeline. Kenya is expected to argue that the pipeline from Kabaale and around Lake Victoria in northern Tanzania to Tanga port (the so-called southern route) will cost more money to construct.
Kenya’s proposed pipeline will be 1,500km from Hoima in Uganda through South Lokichar in northwest Kenya to Lamu port on the Indian Ocean and is expected to cost $4 billion.
The Tanzania route will cost $4.5 billion and cover 1,403km from Kabaale in western Uganda to Tanga port. Uganda, in conjunction with Total of France will provide the funds for the pipeline and Tanzania will provide the land.
Other concerns
Despite Uganda opting for the southern route to the port of Tanga, oil companies in Uganda remain doubtful over the choice, citing costs of the proposed facility. They say they are also yet to receive any communication on the presidents’ agreement on the project.
“Tullow believes that the least cost option remains a route that links Uganda and Kenya’s oil resources and benefits from the shared resources that a joint project would provide, compared with a standalone pipeline,” said Abdul Kibuuka, Tullow’s spokesman.
“However, the choice of the pipeline routing is a decision for the government of Uganda. We are aware of the ongoing discussions between the government of Uganda and both Kenya and Tanzania, but we are not aware that any decision has been made,” Mr Kibuuka added.
Tullow Oil prefers the northern route of Hoima-Lokichar-Lamu as proposed by Kenya, but Total has raised security concerns over the route.
According to Mwendia Nyaga, the chief executive of Oil & Energy Services Ltd, Kenya is mobilising funds to build an export pipeline from Lokichar to Lamu to enable the commercial production of six million barrels of oil in Turkana, in northwest of the country near the border with South Sudan.
