Tanzania offers to buy stake in Uganda’s oil refinery

Tanzania wants an 8 per cent stake in Uganda’s planned oil refinery, a Ugandan minister said on Friday, a move that could be designed to boost Tanzania’s bid to secure a pipeline route for Ugandan crude over a rival pitch by Kenya.

Uganda has been discussing plans for a refinery for about seven years. It would process some oil from fields it is developing, although most crude would be exported. Kenya, with its own oil fields under development, wants a joint pipeline. But Uganda, which initially said it had picked the Kenyan route, has since said it would pursue a pipeline through Tanzania. Nairobi has been pushing for Kampala to switch its plans.

Government plans to begin construction of a refinery have been delayed repeatedly by spats with oil companies over the whether Uganda needed it and by a protracted tendering process.

“Tanzania has offered to take its full share of the 8 per cent offered in the refinery,” Irene Muloni, Uganda’s energy minister, told Reuters on the sidelines of a conference. She said she was awaiting written confirmation. The $2.5 billion project is to be developed as a public-private partnership. Last year, the government picked a consortium led by Russian firm RT-Global Resources to acquire a majority stake, develop and operate the plant.

The Ugandan government has previously said the private developer would acquire 60 per cent, with 40 per cent shared between regional states which were interested.

Uganda discovered crude near its border with the Democratic Republic of Congo 10 years ago, but has yet to start production after repeated delays. Choosing a route to export the crude from the land-locked nation is a vital step.

France’s Total, London-listed Tullow Oil and China’s CNOOC have been pushing for a decision on a pipeline. Total backs the Tanzanian option. Tullow wants the pipeline to run through Kenya where it has other oil interests. – Reuters