The Observer (Kampala)

8 April 2014

Uganda, Kenya to Build World's Longest Heated Oil Pipeline

Should Uganda and Kenya finally build a crude oil export pipeline, it will be the longest heated such facility in the world.

According to a report released last month by Tullow Oil Plc, both countries have agreed to build the pipeline and have commenced a comprehensive study on the pipeline.

"Tullow and its partners have agreed with the government of Kenya to commence development studies. In addition, the partnership is involved in a comprehensive study for an export pipeline," the Tullow Oil Plc annual report 2013 reads.

According to the report, the export pipeline route on the Kenyan side is expected to run mostly underground, over 850 kilometres from the Lokichar basin to the coast. Kenya is to construct the pipeline from Lokichar basin while Uganda is expected to construct its part of the pipeline from the Lake Albert rift basin to link up with the Kenyan pipeline and another from South Sudan to Lamu.

"As the waxy crude oil found in Kenya solidifies at ambient temperatures, the pipeline will contain a specialized heating system to keep [the oil] flowing. Once built, the pipeline will be the longest heated pipeline in the world," the report reads. The entire pipeline is estimated to be 1,380-kilometre long.

Dozith Abeinomugisha, a principal geologist at the Petroleum Exploration and Production department, recently said details and actual designs of the export pipeline would be done later. In Kenya, Tullow has drilled seven wells in the south Lokichar basin, hitting 600 million barrels of oil. Tullow says exploration, appraisal and development programmes will run concurrently.

Commercial threshold:

Tullow expects to find more oil since it says the acreage has many similar geological qualities with Uganda's Lake Albert rift basin, where it discovered oil. It has 11 basins in Kenya and Ethiopia.

"This gives confidence that there is much more to come," Aidan Heavey, Tullow's chief executive officer, said in the report. "Uganda and Kenya are now at the heart of an emerging power house in future global oil supply markets and this has created some high-potential synergies for accelerated oil production and inter-governmental [cooperation] in the region."

However, the report doesn't mention anything to do with Tullow selling some of its interests in Uganda to concentrate in Kenya. The report hints at Tullow selling its interests in Bangladesh instead. It reveals that the current ambition of the Kenyan government and the joint venture partners is to reach project sanction for development, including an export pipeline in 2015/2016.

The report notes that Tullow and its partners in Kenya are moving towards commercialization of the discovered petroleum resources. Paul Mcdade, Tullow's chief operations officer, said: "Although progress in Uganda has been slower than anticipated, this has allowed us to make material progress in our exploration activities in Kenya. Our focus is now on progressing both the Kenyan and Ugandan developments to a common timeline."

The report notes the need for a discussion to allow material regional infrastructure synergies especially in regards to the export pipeline.

According to Tullow, achieving first oil will be dependent on many technological, legal, social and financial factors, agreed upon by regional stakeholders. Regional government alignment and support of the export pipeline, land acquisition for the infrastructure projects, and securing an investor for the pipeline, will be crucial.

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