2 February 2013

Uganda: Nation to Use Kenya Pipeline for Oil Exports

Kampala — Uganda will use the impending pipeline from western Kenya to export its oil and gas products to the world market once extraction begins, Uganda's State Minister for Mineral Development Peter Lokeris has said.

The two governments of Uganda and Kenya recently called for bids from interested partners to express interest in building and operating a pipeline to transport refined petroleum products between the two countries.

The contract to build the intergovernmental infrastructure was in 2007 awarded to Libyan-owned petroleum firm Tamoil but was cancelled in September last year after the project faced multiple delays and financial constraints.

In the latest developments the two countries are reviving the project estimated to cost $300 million linking Kampala to Kenya from Eldoret, western Kenya.

In an official bid communication the two countries said that the pipeline will interconnect with the existing 14-inch diameter pipeline running from Nairobi to Eldoret. The pipeline should be able to transport products to and from Kampala, Uganda.

Uganda imports all its oil and gas products through Kenya by road but the 352km long pipeline is expected to deliver the products to Uganda's capital Kampala easing on the cost of transport and time.

The much awaited pipeline however comes at a time when the two neighboring states are in celebratory moods as they continue to hit new oil finds awaiting extraction.

Uganda together with exploration company Total SA last month announced that Northern Uganda has oil increasing the oil potential for Uganda. Kenya has in the recent months had its share of oil discoveries.

Uganda's oil fortunes have since increased from an estimated catchy of 1.6bn barrels to 3bn barrels, this is also expected to shift on a positive trend, government will in the near future auction thirteen new oil blocks for exploration.

This means that the two countries are going to turn from poverty stricken oil importers to exporters when the earth resource finally is extracted.

This also means that Uganda which badly needed the pipeline will not need the pipeline for importation of refined oil but for export.

In an exclusive interview the State Minister said Uganda will use the pipeline to export its oil.

"We are lucky we are continuing to discover our own oil but when you have sufficient oil you will export some. You don't keep it.

"The explorers will want their money back, after discovering oil you cannot tell them you sit. They will not sit.

They will wish for their money to come back if it's found in abundance," stressed Lokeris.

The minister said justifying the need for the expensive pipeline adding that just like a road the pipeline will be used to transport Uganda's prized resource.

It's no doubt that such exports will increase Uganda's earnings but not much is said of how much ordinary Ugandans will fetch out to buy oil at fuel stations.

Since Uganda is not a member of OPEC yet such decisions can only remain in speculative discussions.

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