A deal which proposes Uganda to ship its crude oil through Kenya’s Lamu port has been pushed forward after the two presidents agreed to meet in a fortnight to deliberate further over the matter.
On Monday, President Uhuru Kenyatta hosted his counterpart President Yoweri Museveni in Nairobi for a business meeting to discuss a deal which will see a joint crude pipeline to serve the two countries, but failed to reach an agreement.
Already, Uganda has made a pact with Tanzania and plans are underway to build a 1,120-kilometer pipeline between Tanga and Uganda to transport Uganda’s crude oil. Being landlocked, Uganda needs to work with neighboring countries to export its resources as well as bring in its imports. Tanzanian’s route is much longer compared to Kenyan option.
Last week, Tanzania said oil marketer Total had set aside $4 billion to begin construction of the pipeline from Uganda’s oilfields to the Tanzanian coast. According to Tanzania, the construction would be hastened to be completed in less than the three-year construction schedule.
According to a joint statement by Kenya’s Energy and Petroleum minister, Charles Keter, and his Uganda counterpart, Irene Muloni, the two heads of state agreed to meet in Kampala in a fortnight. Before the meeting, their technical teams will conduct and complete comprehensive reviews on resources and comparative costs of building a pipeline through Tanzania and Kenya.
The technical team will also provide details on the viability of the pipeline given the proven crude reserves, including the suitability of Lamu, Tanga and Mombasa ports as export options.
The two teams which were established yesterday will precede the talks and will meet next week to work on the issues identified in the Monday meeting.
Some of the concerns that Uganda has about working with Kenya is the issue of land compensation. According to an article by Daily nation, a source who attended the meeting disclosed that “research by Tullow Oil plc and China National Offshore Oil Company suggested that land compensation could be the major factor in delaying the construction of the northern pipeline.”
Citing insecurity in the northern corridor, Uganda sought to withdraw from the Kenyan deal and instead work with Tanzania.
Kenya on the other hand, according to a statement by Secretary of Communication and State House Spokesperson Manoah Esipisu, prefers the northern route as the project will cause development in the area.
“Kenya favors the “northern route” through Lokichar, because as part of the Lamu Port, South Sudan, Ethiopia Transport (LAPSSET) project, it would transform infrastructure and the way of life of the people in the towns and counties across its path,” said Esipisu in a statement.
Kenya now finds itself competing with Tanzania to win Uganda’s partnership.
The two countries are in a race to become the ideal regional trade and transport hubs. The two neighbors have put efforts to expand sea ports, connecting railway and road networks.
Kenya and Uganda are in the process of drilling oil found in the Lake Turkana basin in the north and in the Albertine basin near the border with Democratic Republic of Congo (DRC), respectively.
This comes when oil prices are hitting bottom low across the globe. But the two East African nations are hopeful that the new discoveries will contribute to the economic growth of the individual states and the region as a whole.
Image credit: Jared Nyataya/ Nation Media Group