French Giant Total Wins as Uganda Settles for Tanzania in the Crude Oil Export Pipeline Project

Uganda announced settling for the Southern route to Tanzania’s Port of Tanga as the economically viable oil pipeline exit point as opposed to Kenya.

The Tanga route was backed by Gulf Interstate Engineering study and French giant Total was the major stakeholder while the Southern and northern Kenya routes, were informed by  Toyota Tsusho feasibility study and backed by Tullow Oil Plc.

The decision was reached after a series of haggling between Uganda President Yoweri Museveni, counterparts Uhuru Kenyatta of Kenya, John Magufuli of Tanzania, oil companies and major stake holders in the region’s budding oil sector.

In a join communique issued by East Africa heads of State at the 13th Summit of the Northern Corridor Integration Projects, the leaders agreed that two crude oil pipelines be constructed; from Lokichar to Lamu in Kenya and another oil pipeline from Hoima to Tanga in Tanzania, to be developed by Kenya and Uganda respectively.

Uganda’s Foreign affairs minister Sam Kuteesa further confirmed to the media in Kampala that nation has settled for the route and the decision has been informed by the cost effectiveness among other factors.

“We considered Tanga oil pipeline route based on a number of aspects—among them it is the least cost,” Kuteesa said.

Uganda and Kenya signed a memorandum of understanding in August 2015 to construct a joint 1,380-kilometre Crude Oil pipeline from Uganda-Oil rich Albertine graben through Lokichar basin in Northern Kenya to the coastal town (Port) of Lamu.

However, the deal suffered setbacks after Uganda revised it’s decision and duly agreed with its southern Neighbor to commence studies for a possible route to the port of Tanga. Uganda oil learnt that the decision to Tanga route was a motion originated by Total to the Uganda government.

Total’s President Jabier Rielo held a close door meeting with Museveni in July 2015 and according to the communique, the two together with Ministry of energy officials discussed the viability of all route options and the best funding models for the project.

A source from the Directorate of Petroleum who spoke to Uganda oil on condition of anonymity in October 2015, said the nation was under pressure from prospective funders and business stakeholders to look for a more secure and cost effective route for the project.

Total, as a major player among the 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 also preferred to lead the Consortium in the Pipeline project.

 

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