Kenya pipeline link to Uganda oil fields proposed

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Mar. 30 -- Kenya's Mombasa-to-Eldoret oil pipeline could eventually be extended to Uganda's Albertine rift basin—site of promising recent oil discoveries—once the line has been extended to Kampala, Uganda.

Habib Kagimu, chairman of Tamoil Uganda Ltd., which in 2006 won the tender to construct the 360-km pipeline extension from Eldoret, Kenya, to Kampala, said his firm's current plans also call for extending the pipeline from Kampala to the Albertine rift in Uganda to transport oil from fields there to the Port of Mombasa on the Indian Ocean for global export (see map, OGJ, Feb. 16, 2009, p. 34).

Echoing earlier statements by Ugandan officials, Kagimu confirmed, over Uganda's national WBS TV, that work on the often-delayed pipeline extension from Eldoret to Kampala will start in April and will take 15 months to complete, with a further extension of the line to the Rift area already in the planning stages.

"Our engineers have designed the pipeline in such a way that in the future, it will be able to transport oil from Uganda back to Mombasa for export," said Kagimu, who added that the pipeline eventually could also be extended from Kampala to Rwanda and Burundi.

There remains debate over the extension to the Albertine rift basin, however, as some Ugandan officials oppose the construction of the export link and instead propose retaining the oil to be refined in Uganda, a proposal that Tumoil and exploration firms Heritage Oil, and Tullow Oil reject as not feasible.

In January, Ugandan state media reported that Uganda and Kenya had formed a joint
coordination committee to fast-track the Eldoret-Kampala pipeline, which had been postponed several times since 2006.

The New Vision newspaper reported that harmonizing bilateral and international agreements defining legal, commercial, financial, taxation, transportation, and custom issues had delayed the pipeline project. According to the Ugandan energy ministry, however, most of these issues have been resolved, and it also expects work on the extension to Kampala to start in April.

Libya-based Tumoil, which in 2006 won the tender to construct the line, will hold a 51% stake in the pipeline, while Uganda and Kenya will jointly hold the remaining 49%.

Recent oil finds
The pipeline extension plans coincide with recent oil discoveries by Tullow Oil and Heritage Oil in blocks they operate and share in Uganda (OGJ Online, Mar. 27, 2009).

Heritage and Tullow hold interests in three licenses on the Ugandan side of the Lake Albert rift basin. Heritage is operator of Blocks 1 and 3A, holding a 50:50 stake with Tullow, while in Block 2 Tullow is operator with a 100% stake.

Tullow and Heritage earlier this month said that exploration in Uganda has shown reserves of at least 600 million bbl.

Contact Eric Watkins at hippalus@yahoo.com.

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