Page 4 - AfrOil Week 36 2019

AfrOil COMMENTARY AfrOil
Will Tanzania’s loss be Kenya’s gain?
Nairobi’s talk about working with Kampala to build an oil export pipeline is not likely to lead to much concrete action
WHAT:
Kenya is willing to team up with Uganda to build a pipe that will pump crude oil from the Lake Albert area to the coast of the Indian Ocean.
WHY:
Uganda has no reason
to believe Kenya has resolved the land com- pensation issues that led it to embrace a Tanzanian pipeline route.
WHAT NEXT:
Officials in Kampala will have to find different reasons and different ways to resolve problems stemming from the collapse of Tullow Oil’s farm-in deal with Total and CNOOC.
THE collapse of Tullow Oil’s farm-in deal with France’s Total and China National Offshore Oil Corp. (CNOOC) for the Lake Albert project is unfortunate – and not just for Uganda, the coun- try that is home to the assets in question. Tanza- nia is also in a tough spot, since it was supposed to host the longest section of the pipeline that would have pumped crude from the Lake Albert blocks to the coast of the Indian Ocean.
But Kenya appears to be hopeful that recent events will create a new opening for involvement in the development of Uganda’s oil resources.
Andrew Kamau, the principal secretary of the petroleum department of Kenya’s Ministry of Energy and Petroleum, indicated on Septem- ber 9 that his country was ready to make a deal with Uganda on the construction of a new oil export pipeline. He described Kenya as “open for business” but indicated that it would wait for Uganda to initiate talks rather than the other way around.
Kamau explained that Nairobi had taken this position because it was not willing to build a pipeline until Tullow Oil had settled questions about development work at the Lake Albert blocks, since the upstream and midstream components of the project are integrated. “We would be open to [joint development], but you understand that it has been suspended because the upstream has stopped,” he said.
He added: “They [Uganda] would have to solve the issues around upstream development first before we can consider approaching them. That said, we are moving full speed with plans to build our pipeline.”
Back to Kenya
This is hardly the first time Kenya has shown interest in serving as a transit route for Ugandan crude oil.
Officials in Nairobi had previously hoped to work with their counterparts in Kampala on the construction of an export link from Hoima, a city in western Uganda, to Lamu, a port on the Indian Ocean coast. But in 2016, Uganda’s gov- ernment opted to endorse a Tanzanian plan that provided for building the East African Crude Oil Pipeline (EACOP) along a 1,445-km route from oilfields in the western part of the country to the port of Tanga.
Kampala did not discard the proposed Hoima-Lamu route and choose EACOP because it expected the latter to be much shorter or cheaper. Instead, one of its main considera- tions was the hope that Tanzania would prove less likely than Kenya to create difficulties related to compensation for land along the pro- posed route of the pipeline.
This was a pressing issue, given that squab- bles over this issue had already caused work to fall behind schedule in Kenya.
Land compensation
The matter is no less pressing now that Tullow’s farm-in deal has foundered.
As such, if Ugandan officials do consider Kenya’s offer, they are likely to start discussions by asking whether there is any reason to believe that land compensation will proceed more smoothly. And unfortunately for Kenya, the answer to that question appears to be no.
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nda is
Principal Secretary Andrew Kamau (Photo: Kenyan Ministry of Energy and Petroleum)
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likely to start
discussions with Kenya by asking if there is any reason to believe that land compensation will proceed more smoothly
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w w w . N E W S B A S E . c o m Week 36 10•September•2019