Africa: Oil pipeline deal to be sealed next month

Kenya, Rwanda and Uganda will next month sign a deal that is expected to guide the construction of the Hoima-Lokichar-Lamu crude oil pipeline, a key project that could dictate the shape the region’s energy infrastructure will take.

The three countries said they will sign a Memorandum of Understanding that will bind the two implementing countries —Kenya and Uganda — to ensuring the project is completed in 2017-2018 when both states are to officially start exporting crude oil.

The pipeline is expected to run 1,500km from Hoima near Lake Albert in western Uganda to Lamu port on Kenya’s Coast. South Sudan is to be connected at Lokichar.

Each country will build the portion within its territory. Details from last week’s Northern Corridor Integration Projects meeting in Nairobi show the three countries agreed to appoint a single transactional advisor for the project but at the same time give each country the option of choosing its own financing arrangement.

“The pipeline should be developed as a single project but split into lots and implemented within the agreed specifications and timelines… the respective countries to ensure that any change of their priorities doesn’t interfere with the construction and operation of the entire pipeline from Hoima to Lamu,” said a ministerial report of the summit seen by The EastAfrican.

South Sudan, the report says, is expected to continue talks with Kenya on a possible inter-governmental agreement on the project that will see Juba formally join the project. 

The Nairobi meeting was attended by presidents Uhuru Kenyatta (Kenya),  Paul Kagame (Rwanda) and  Yoweri Museveni (Uganda) and Salva Kiir (South Sudan), while Tanzania was represented by Prime Minister Mizengo Pinda, and Burundi  by second Vice President Gervais Rufyikiri.

The proposed crude oil pipeline is crucial for Kenya, Rwanda and Uganda who are implementing various joint projects including railway lines, pipelines, power lines and a refinery.

For Uganda, a joint pipeline with Kenya, Rwanda and South Sudan means that it cuts the cost and fast-tracks the construction process.

For Kenya, the pipeline increases the viability of the Lamu Port South Sudan Ethiopia Transport (Lapsset) corridor, especially because a crude pipeline was not part of the initial design.

A shared petroleum infrastructure is vital for Kenya and Uganda as Tullow Oil Plc has confirmed the presence of commercial oil near the shores of Lake Albert in Uganda and also discovered crude oil in Turkana County in northwestern Kenya.

For South Sudan an alternative pipeline to evacuate its oil is a strategic investment especially in the wake of constant hostilities between Juba and Khartoum.

The construction of the new pipelines are seen as crucial in lowering costs and ensuring energy security of hinterland land countries — like Uganda, Rwanda and Burundi.