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Kenya and Uganda begins Talks over Construction of new Oil Pipeline

  • Date de création: 28 août 2015 17:08

(Agence Ecofin) - Talks have been ongoing between the two neighboring countries Kenya and Uganda over the construction and financing of a new oil pipeline linking the two countries and ferry crude produced by companies including Tullow Oil Plc, according to the Kenyan Energy Ministry.

Discussions over project time frames involving officials from both East African countries also began this week, Joseph Njoroge, the ministry’s principal secretary, told Bloomberg. The negotiations followed an announcement made by the Kenyan President Uhuru Kenyatta on the 10th of August that the route for the conduit had been agreed upon after months of debate.

We have started working out the details together with the Ugandans. We will also engage as many stakeholders as we can. We want this project to take off immediately.” Njoroge said.

Despite the facts that oil was discovered in Uganda in 2006 and four years later in Kenya, both are still in the planning stages of commercial development.

The pipeline however will run for about 1,500 kilometers (930 miles) from Uganda’s Hoima district through Lokichar north of Kenya and on to the coastal town of Lamu. The facility will be developed jointly, while each country will be responsible for raising financing for the project costs within their borders, Njoroge said.

Raising financing for the pipeline may be a “complex process, but not entirely impossible,” John Ngumi, chairman of the state-owned Kenya Pipeline Co., commented.

It’s never easy,” he said. “Infrastructure financing is done all over the world. Raising financing for crude oil pipelines is done all around. I know what options exists to raise financing, it’s doable.”

Oil has been found in both countries, with Uganda estimating finds at 6.5 billion barrels and Kenya at 600 million barrels. The planned pipeline to the Indian Ocean, which the government estimates will cost about 400 billion shillings ($3.9 billion), will allow the U.K. company,Tullow to start exports from joint ventures with Africa Oil Corp. and Total SA. China’s Cnooc Ltd. is also a partner in Uganda.