Kenya and Uganda to establish company to manage crude oil pipeline

Kenya and Uganda are making plans to set up an oil company to be owned by all the stakeholders in the $4 billion crude oil pipeline deal.

Daniel Kiptoo, Petroleum Legal Advisor to the Cabinet Secretary Davies Chirchir told the Nation that the planned company will help address conditions set by Uganda on the pipeline.

It will help the two countries move fast in decision making as well as agree on tariffs set for transporting oil per barrel.

The framework of the oil company, shareholding, location, operations and the process of recruiting the management will be handled by the Kenya-Uganda committee on the crude oil pipeline.

“The company will be a joint venture owned by Uganda, Kenya and oil investors in the country. The firm will own and manage the pipeline and help us address the issue of tariffs,” said Joseph Nyaga who is in charge of the Northern Corridor Integration Project Authority in Kenya.

TANGA ROUTE REJECTED

Meanwhile, the two countries have ignored a move by Total E&P Uganda to scout the Tanga route as an alternative cheaper option for the crude oil pipeline.

Officials handling the crude oil pipeline discussions from both countries said they are working on the directive of President Uhuru Kenyatta and Uganda’s Yoweri Museveni.

The directive is informed by the consultant Toyota Tsusho, hired by the two countries.

The two presidents agreed that Hoima-Lokichar-Lamu oil pipeline must start as soon as possible subject to financing, security guarantees, transit tariffs and no further delay by Kenya.

“Uganda is already engaged in serious discussions with Kenya on the way forward especially on the conditions given to develop the pipeline,” said Mr Bashir Hangi, communications officer at the Petroleum Exploration and Production Department of Uganda’s Ministry of Energy.

According to Uganda’s principal engineer for the refinery project at the petroleum directorate, Steven Enach, “the committee is working to harmonise the conditions set by Uganda so that the project can move quickly.”

At the moment, Kenya and Uganda are awaiting settlement on a decision that will open up financing and dictate construction of the pipeline.

FINANCING

Uganda oil investors, Tullow Oil Plc, Total and Cnooc Ltd together with Kenya’s Tullow Oil and Africa Oil are expected to deliberate on this and make a final decision by October 2017.

The hitch by Total on an alternative route together with Uganda’s demand that the conditions should be met first stand in the way of faster implementation of the project.

The arguments if not looked into deeply and settled could further extend the first oil production timeline beyond 2020.