{UAH} Allan/Pojim/WBK: Uganda, Kenya resume talks over oil pipeline

http://www.observer.ug/business/38-business/43227-uganda-kenya-resume-talks-over-oil-pipeline

Uganda, Kenya resume talks over oil pipeline

Written by Alon Mwesigwa

Uganda's oil pipeline options

It is now down to political brinkmanship of the highest order as Uganda pushes closer to a final resolution over where it intends to export its crude oil from the western fields, with Kenya vying for the once-preferred Lamu pipeline route while Tanzania insists there is no better  place than through Tanga port.

The latest battleground over Uganda's crude export pipeline route was in Nairobi this week, where President Museveni met his Kenyan counterpart, Uhuru Kenyatta, although no final decision was made.

In a joint statement, the two parties described the talks in Nairobi as "fruitful" but added that the two leaders will meet in Kampala after two weeks for a final decision.

The meeting was attended by representatives of both Tullow and Total E&P. 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."

The Kenyan meeting came after Uganda had had engagements with the Tanzanian government, with all indications that the route might go to Tanga. French oil firm Total, by the far the largest oil major in the region, said it had the $4bn needed for the pipeline through Tanzania.

Uganda has discovered about 6.5bn barrels of oil, with 1.4 billion of this said to be recoverable, while Kenya has 600m barrels. Tanzania does not have commercial oil yet, but it targets to tap the opportunities that come with hosting the pipeline.

Irish firm Tullow favours the Kenyan route because it would boost its operations in the Turkana area, where it is exploring for oil. Total favours the Tanzania route, saying it is cost-effective and does not have the security threat that the northern route of Kenya poses.

On Tuesday, Kenya's Daily Nation reported that the discussions centered on the bitter disputes involved in the acquisition of land for the Lamu Port South Sudan-Ethiopia Transport (Lapsset) and in the construction of the standard gauge railway (SGR), which could affect the construction of the pipeline. Such land issues, Uganda argued, could delay the project and make it costly.

Uganda also had an issue with the fact that the Lamu port had not been constructed and that it could delay its planned start to export oil by 2018.

Uganda also pointed to the security of the pipeline, with the Lamu port being 'susceptible' to terrorist attacks given its close proximity with volatile Somalia. Kenya, on the other hand, assured Uganda that the infrastructure would be secure.

Earlier, Total chief executive Patrick Pouyanne reportedly told Reuters in Paris that the firm's decision to push through the Tanzania route was influenced by security concerns on the Kenyan route.

"The debates on security within Kenya are very important to us. We are working with the governments of Kenya, Tanzania and Uganda and we will reach a solution that will be beneficial to Uganda and neighbouring countries," Pouyanne reportedly said.
amwesigwa@observer.ug

Uganda, Kenya resume talks over oil pipeline

http://www.observer.ug/business/38-business/43227-uganda-kenya-resume-talks-over-oil-pipeline

Sent from my BlackBerry 10 smartphone.