Uganda dumps Kenya in $4bn pipeline plan, opts for Tanga
What you need to know:
- Kenya and Uganda had agreed to construct the crude oil pipeline through the Northern Lamu route mid last year. France’s Total, an investor in Uganda’s pipeline dismissed the option, quoting insecurity along the route.
- “During the visit, Total insisted that it will produce Uganda’s oil despite falling crude oil prices, but through the port of Tanga,” said the official who could not be quoted because of the sensitivity of the matter.
- The countries have all been calm on the pipeline decisions since December. However, senior official at the ministry of energy and mineral development in Uganda said Total CEO Patrick Pouyanne visited Ugandan President Yoweri Museveni to convince him on taking the Tanga, Tanzania route in December.
Kenya’s hopes of sharing a proposed Sh400 billion crude oil pipeline with Uganda could hit a dead end as Uganda and Tanzania firm up plans to construct a pipeline through Tanga.
A statement from Tanzania’s presidential press unit Tuesday stated that President John Magufuli met Uganda’s President Yoweri Museveni, and agreed that the pipeline will pass through Tanga.
“The two agreed to begin construction of the crude oil pipeline from Tanga to Uganda, for the benefit of the two countries and their East African counterparts,” said Tanzanian government spokesman Gerson Msigwa on Tuesday.
“The pipeline will have a length of 1,120 km and the project will create employment for over 15,000 people.”
Kenya and Uganda had agreed to construct the pipeline through the northern Lamu route in mid last year. France’s Total, an investor in Uganda’s pipeline, dismissed the option, quoting insecurity along the route.
A study by Toyota Tsusho shows that the Kenya–Uganda northern route for the heated crude oil to Lamu port would be cheaper for both countries.
Total has been on the forefront of entities pushing the Tanga route. A memorandum of understanding binding Tanzania with Uganda and initiating a study on the route was signed last year.
The two countries had remained tight-lipped about the pipeline proposal. However, a senior official at the ministry of energy and mineral development in Uganda said Total CEO Patrick Pouyanne had visited President Museveni to try to convince him that the Tanga route is better.
“During the visit, Total insisted that it will produce Uganda’s oil despite falling crude oil prices, but through the port of Tanga,” said the official, who could not be quoted because of the sensitivity of the matter.
Acting on Uganda’s stance on the pipeline, President Uhuru Kenyatta set up a special task force to explore ways of exporting oil by rail and tracks. The task force has till September to begin oil production, a move that investors have termed impossible.
President Kenyatta is treating the rail and road transport plan to export oil as a short-term measure awaiting the final solution that could see the crude oil pipeline built.
Investors in Kenya and Uganda oil could, however, have the final say on the pipeline route. China's CNOOC and Britain's Tullow Oil and France’s Total have invested in Uganda’s oil. Tullow is also working in Kenya.