Details of collapsed Kenya, Uganda pipeline talks emerge

Ugandan energy officials are still in the country a day after bilateral talks to unlock the deadlock around the Uganda- Kenya oil pipeline collapsed. It is now emerging that other than security, Uganda is uneasy about the Kenyan government’s ability to acquire the land needed for the pipeline. The Ugandan energy officials will be carrying out a review of both the port of Lamu and Mombasa before presenting a joint report in Kampala in two weeks.

Four weeks ago, Uganda appeared to do a u-turn after what had been touted as successful discussions on the subject of a joint pipeline in August last year, and now Kenya has quickly swung into action. Monday morning, President Yoweri Museveni jetted into the country for bilateral talks on a way forward.

Sources privy to the meeting say Uganda’s hesitation to a joint pipeline with Kenya hinged on challenges they believed Kenya faced with land acquisition as well as security, which they asked Kenya to guarantee, should the joint route be adopted.

It also emerged that the usually visible upstream multinationals have taken a back seat in these talks, having been axed out of the bilateral talks on Monday as well as the two week deliberations by the energy ministries in the two countries, fuelling speculation that the two countries are avoiding any interests or influences from the upstream firms.

Tuesday, the Minister for Energy of Uganda, his Permanent Secrerary and their technical teams were holed up at the Ministry of Energy and petroleum headquarters in Nairobi, as they began reviewing proposals and building co-operation frameworks for the joint pipeline.

In what appears to be a deliberate move by Uganda to pursue Kenya, the two countries seem to concur that the least cost solution for construction of the pipeline remains the best option.

The cost breakdown shows that the most expensive route is Hoima to Tanga whose cap stands at about 5.5 billion dollars, while a joint one with Kenya through the southern route will cost 4.4 billion dollars while the preferred northern route will cost 4.2 billion dollars.

Should the talks fail and Uganda decides to go it alone from Hoima to any port in Kenya it would cost them 3.9 billion dollars, and if Kenya builds its own pipeline through the LAPPSET route that’s from Lokichar to Lamu, the total cost would be 2.1 billion dollars.

However, building an independent pipeline would push up the costs for transportation. According to Petroleum Permanent Secretary Andrew Kamau, a joint pipeline with Uganda would cost nine dollars a barrel to transport the crude oil while going it alone would push the cost to 14 dollars a barrel.

Ministry sources say the officials will leave Nairobi Wednesday for a fact finding mission to the ports of Mombasa, Lamu and Tanga in Tanzania.