Uganda select Tanzania as Choice for Multi Billion Dollar Oil Pipeline Project but all is still Unclear

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Workers Lay a pipeline in open earth

Workers Lay a pipeline in open earth

A latest communique from Uganda’s presidency  suggests the country is currently working on  the implementation of an earlier decision to have its crude oil export pipeline southwards to Tanga in Tanzania as opposed toKenya.

The statement relates to a bilateral meeting between Ugandan President Yoweri Museveni and his Tanzanian counterpart John Magufuli on the sidelines of the East African Community Summit in Arusha Tanzania.

“The two countries are planning to build an oil pipeline between Tanga and Uganda covering a distance of 1120km” notes a statement from Office of the Presidency in Uganda.

However, in an interview with Bloomberg, Uganda’s Ministry of Energy and Mineral Development spokesperson Bukenya Matovu, said he wasn’t sure in his capacity whether the south route is the final decision government had taken.

“Maybe that is one thing they talked about,”  Bloomberg quoted Matovu.

Matovu indicated that the Tanzania route is preferred because  “it is shorter and more secure in light of what is happening in Somalia,”

If implemented, this decision on Ugandans part undermines earlier settlements between Uganda and Kenya to have 1,380-kilometre route from Oil rich Albertine graben through Lokichar basin in Northern Kenya to the coastal town of Lamu.

Pressure?

A source from the Directorate of Petroleum who spoke to Uganda oil on condition of anonymity in October 2015, said the nation is under pressure from financiers to look for a cost effective and secure route, alternative to the Kenya route.

France’s Total, one of the oil firms developing Uganda’s fields, had raised security concerns about the Kenyan route. A Kenyan pipeline could run near Somalia, from where militants have launched attacks on Kenya. Total has always preferred to lead the Consortium in the Pipeline project.

Yet to be confirmed reports also indicate Total has promised to Fund the project.

Expert Weighs in 

In an exclusive conversation with Uganda Oil, Extractives sector governance Expert Angelo Izama said the Southern Route serves greater economic viability to Uganda’s Oil Industry as opposed to the Kenya due the political-economic realities in Kenya that might threaten Uganda’s baby steps towards a vibrant sector.

“Kenya must be seen as a hostile nation as far as strategic interests of Uganda are concerned and with regard to oil specifically. Firstly,  it’s economically superior; is the main access to the coast ( Uganda has essentially an import economy), it has less oil and is served by making money off evacuating oil through its ports from neighboring countries and its political system is unstable,” Izama opined.

Izama noted that the Pipeline and oil trade relations between the two nations gives Kenya greater economic perks than would accrue to Uganda if it had it’s crude south ward.

“That is to say,  combining import traffic and export ( oil) evacuation would immediately increase the leverage of the Kenyan government” he said.

Meanwhile Kenya Energy Ministry Permanent Secretary Joseph Njoroge told Bloomberg that they are unaware if Tanzania and Uganda have settled on the a pipeline.

Uganda Oil