{UAH} Oil pipeline dispute strains east Africa relations - FT.com

the route of a proposed oil pipeline from Ugandato the Indian Ocean is straining relations in east Africa and threatening a $23bn US-backed regional trade corridor.

Public disagreements between the main oil companies involved in the $4bn pipeline project — Total of France, Tullow Oil of the UK and China's Cnooc — over the preferred route are stoking tensions between the governments of Uganda, Kenya and Tanzania.

Uhuru Kenyatta, Kenya's president, and his Ugandan counterpart Yoweri Museveni said they held "fruitful discussions" in Nairobi on Monday on the pipeline but failed to agree a route. They pledged to meet again in Kampala in two weeks after officials had met to "harmonise" their views. 

The pipeline's route appeared to have been settled in August, as the two leaders signed a deal for a pipeline from Uganda's fields in the Lake Albert basin via Kenya's oilfields near Lake Turkana, and on to Lamu on the Kenyan coast.

Kenya said at the time that the pipeline would be the foundation for a $23bn infrastructure corridor connecting the two countries, Ethiopia and South Sudan and possible others. It had signed a memorandum of understanding with the US to help develop it. 

But two months later, after intensive lobbying by Total, Uganda announced it was in discussions with Tanzania, to direct the pipeline through its southern neighbour. 

This month came an announcement from the Tanzanian and Ugandan governments that the pipeline would go via Tanzania to the port of Tanga, and that Total had raised the $4bn needed to finance it.

After Monday's talks both options still seemed to be on the table, along with a third route through southern Kenya that passes further from Somalia than the Lamu option. 

Total has said it is concerned about the Lamu route because of the potential for attacks on the pipeline by Somalia-based al-Shabaab Islamist militants. Some analysts, however, say terrorism is a regional issue for east Africa and so the risks are similar wherever the pipeline is built. 

Uganda, with 1.7bn barrels of recoverable oil reserves and a less developed economy than Kenya, has the most to gain from playing its neighbours off against each other to secure the best possible deal. However, oil industry analysts say it is likely to benefit most from sharing construction and running costs of a pipeline with Kenya. 

With only 600m barrels of oil reserves and a much more diversified economy, Kenya has shown less urgency to build the pipeline. But analysts say that if the project does not go via the northern route it is unlikely that the trade corridor — which would benefit Kenya's coastal region and less developed northern counties — will go ahead. 

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Brian M. Kwesiga