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Uganda chooses Tanzania over Kenya in oil route battle

COUNTIES
By Alon Mwesigwa, The Observer | April 19th 2016

The oil pipeline route puzzle has been solved, with Uganda choosing to export her crude oil to the East African coast through Tanzania and not Kenya.

According to Uganda newspaper The Observer, the information is contained in a draft report dated April 11, 2016.

The report will be presented to the presidents of Tanzania, Uganda and Kenya when they meet tomorrow in Kampala.

This development all, but ends Kenya’s fight to have the oil pipeline go through the Turkana area to Lamu port.

“The comprehensive analysis of the different options (routes), studies and due diligence results has been completed,” said the technocrats in report. “The Kabaale-Tanga route is the only option to secure first oil export by mid 2020, with pipeline availability of 99 per cent.”

First export

The report says that on the Kabaale-Lamu route, the first oil export could only happen in mid-2022, with the pipeline availability at 80 per cent.

The report was compiled by a team of technocrats in Uganda, led by Ernest Rubondo, the commissioner for petroleum exploration and production.

The Observer understands that Kenyan and Tanzanian officials presented their positions touting the advantages of their respective routes.

Last October, Uganda and Tanzania signed an agreement to explore the possibility of building a crude oil pipeline between the two countries, setting the stage for fierce competition from Kenya, which thought it already agreed a deal with Kampala.

The competing options are the Kabaale-Lokichar-Lamu port (Kenyan) route, and the Kabaale-Tanga port (Tanzanian) route. Kenya is pushing for the once-preferred Lamu pipeline route, which goes through its oil-rich Turkana region.

On the other side, Tanzania insists there is no better route than through Tanga port. UK’s Tullow Oil favours the route through Kenya to Lamu for its interests in the Turkana area, where Kenya has discovered about 600m barrels of oil.

Uganda has 6.5 billion barrels of oil, with between 1.2 and 1.7 billion barrels recoverable.

France’s Total E&P favours the Tanzania route. It argues that it is cost-effective and does not have the security threat that the northern Kenyan route poses.

A meeting last month in Nairobi, attended by President Yoweri Museveni and Kenya’s Uhuru Kenyatta, and representatives of the oil firms Tullow and Total E&P, resolved to set up a group of technocrats to assess both routes and report in two weeks’ time.

The presidents said they would go with “a least-cost option for a regional pipeline” and address the “constructability issues along the route to be chosen.”

Now the latest report seems to put everything to rest, recommending the Kabaale-Tanga port in Tanzania.

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