19 September 2017

Kenya: Decision on Pipeline Route Could Strain Kenya, Total Relations

Photo: The East African
(file photo).

Differing views on the route the crude oil export pipeline from South Lokichar in northwestern Kenya to the Indian Ocean shoreline should take, could strain relations between the government, Total and other partners, an industry lobby has warned.

The Kenya Civil Society Platform on Oil and Gas said the entry of Total SA into the onshore blocks 10BB, 13T and 10BA could either be supportive or disruptive.

The lobby group said relations between Total and Kenya could be strained if the French firm opts to push for building a crude pipeline from South Lokichar to Hoima in western Uganda to join the $3.55 billion East Africa Crude Oil Pipeline from Hoima district in Albertine Basin to Tanzania's Tanga port.

"Attempts by Total to push Kenya to join EACOP are likely to be rebuffed due to the country's commitment to the Lamu Port-South Sudan-Ethiopia-Transport (LAPSSET) route," said Kenya Civil Society Platform on Oil and Gas's co-ordinator Charles Wanguhu.

Kenya opted to build a $2.1 billion crude pipeline of about 855 kilometres from Lokichar to Lamu port. Building a 1,451-kilometre pipeline from Hoima through Lokichar to Lamu would have cost $5 billion.

In 2016, Total played an instrumental role in Uganda's decision to build the East Africa Crude Oil Pipeline. The South Lokichar basin in acreage l0BB and 13T has 750 million barrels of crude.

Last month, Total signed a deal to acquire a 25 per cent stake in block 10 BB, 13T and 10BA in Kenya, buying out Maersk Oil.

Total's chief executive officer Patrick Pouyanné said a $7.45 billion shares-for-debt swap for acquiring the Norwegian firm is expected to close in the first quarter of 2018.

"We will have an opportunity to better discover and understand how we can develop these promising onshore discoveries in Kenya, which will become a core area for Total," he said in an e-mail.

Tullow Oil Plc owns a 50 per cent stake of three blocks in Kenya, while Africa Oil Corporation owns a 25 per cent stake. Total, Tullow and China National Offshore Oil Corporation (CNOOC) own stakes in Uganda's Albertine basin.

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