Kenya now to build own oil pipeline if Uganda plan flops

Kenya may build its own pipeline to transport oil from the northern Turkana region to a port along the coast if a proposal to build one jointly with Uganda falls through, the country’s Energy Principal Secretary Joseph Njoroge has said.

 

The comment came amid increasing certainty that Tanzania has won out on its tug-of-war with Kenya to be confirmed as a safer and more cost-effective route for the pipeline from Uganda.

 

Kenya is competing with Tanzania to build the pipeline from oilfields in Hoima, western Uganda. It would either traverse northern Kenya’s desert to a proposed port at Lamu, near the border with Somalia, or south around Lake Victoria to Tanga on Tanzania’s coast. "Whatever the outcome, we (Kenya) will build an oil pipeline, whether we are together with the Ugandans or not," Njoroge said in a phone interview Wednesday from Lokichar in northern Kenya.

 

The pipeline via Kenya would link up with the Lamu Port Southern Sudan-Ethiopia Transport corridor, a proposed $26 billion project that will include a port and a railway.

 

But according to Jacques Nel, senior economist at NKC Independent Economists in Paarl, South Africa, Kenya’s oil reserves currently estimated at about 600 million barrels “do not support the country building its own pipeline.”

 

“To build its own pipeline at the moment is not viable,” Nel said in a phone interview. 

 

"Kenya has so much more vested interests in the regional pipeline, they have more to lose,” he added. “They may have to make some concessions on tariffs, levies to sweeten the deal with Uganda."

 

A senior executive of Total SA, which is a key partner in the pipeline project, reiterated in Dar es Salaam on Wednesday that Tanzania was the preferred route. 

 

Tanzanian president John Magufuli said in early March that he’d agreed with his Ugandan counterpart Yoweri Museveni to route the conduit via his country at a cost of about $4 billion. 

 

Total SA, which is developing oil discoveries in Uganda, will help fund the project, according to the Tanzanian government. 

 

The UK-based Tullow Oil Plc, which has its own oil discoveries in Uganda and Kenya, favors the route via northern Kenya that the Nagoya, Japan-based Toyota Tsusho Corp. estimates may cost about $5 billion.

 

Kenyan and Ugandan officials last week toured the Kenyan coastal towns of Mombasa and Lamu, and Tanga in Tanzania, as they explore the most feasible route for the pipeline.  A ministerial task force established by Museveni and Kenyan president Uhuru Kenyatta also toured Hoima and Turkana.

 

A meeting to decide on which route is most feasible will be held April 7 in the Ugandan capital Kampala, Njoroge said.

 

“Kenyan oil would be shipped via our ports,” Njoroge said, dismissing a report in the Nairobi-based East African newspaper last week that crude extracted from Turkana might be shipped through Tanga. “It’s a figment of an idea. It can never be.”

SOURCE: THE GUARDIAN