Pipeline fiasco, first sneeze in eminent black gold curse

Uganda and Kenya have had their fair share of infrastructural lunacy. Take the so called “Lunatic Express” referred to by Charles Miller in his 1971 book of the same name. It told of the risible Uganda Railway which connected Uganda to the Indian Ocean, through Kenya, at an estimated £3 million in 1894, marred by hefty budget costs and lions feasting on the unfortunate engineers in the dead of night. Upon Uganda’s discovery of crude oil, in 2006, technocrats have proposed pipeline route from Uganda’s oil rich Hoima to Lamu Port on the smooth Kenyan coastline. The lions may be scarcer but the risks are abundant.

Uganda’s 6.5 billion barrels of “Sweet Oil” of which 1.7 billion barrels are recoverable, cements its reserves as the fourth largest in Sub-Saharan Africa (after Nigeria, Angola and South Sudan). Upon completion, the pipeline will transport about 230,000 barrels per day of crude products, making Uganda a mid-level African producer, on a par with Equatorial Guinea and Gabon.

It means Uganda is driving the $4 billion pipeline project to pump crude from Uganda’s Hoima oil fields to the Kenyan port of Lamu, also drawing from Lokichar, in Kenya’s Turkana region, along the way. South Sudan is also interested in a bid to by-pass the expensive route through Khartoum.

Ugandan crude’s waxy nature means it can solidify and slow down the passage through the pipeline. This creates a need to heat the pipeline, making it even costlier and the longest heated pipeline in the world.

Kenya Option

The initially signed Memorandum of Understanding for the pipeline between East Africa’s powerhouse, Kenya and Uganda would see the it stretch from Hoima via Karamoja-Lokichar basin in Turkana to Lamu with an option of linking 600 million barrel rich Lokichar with another crude pipeline from South Sudan. The $4.5 billion pipeline was part of the ambitious Lamu Port Southern Sudan-Ethiopia Transport Corridor Project.

The Kenyan route would also run a storage facility at Lokichar with each country building their portion of the pipeline. Following Tullow Oil’s 600m barrel discovery of oil in the Turkana area the international oil company is backing Kenya to link the oil fields. The joint pipeline between Kenya and Uganda would an output of 300,000 barrels per day with 200,000 barrels for Uganda and 100,000 barrels for Kenya.

Tanzania option

Uganda and Tanzania stunned the region when on agreeing to construct the 1,403 kilometre oil pipeline from Hoima to Tanzania’s Tanga port and President John Pombe Magufuli remarking that pipeline would create  15,000 jobs. The 24-inch pipeline will deliver about 200,000 barrels of crude oil per day and France’s Total E&P favors the Tanzania route citing its cost-effectiveness and does not have the security threat from Al Shaabab militias that the northern Kenyan route poses.

Final decision

We did see glimpses of the multi-billion dollar project taking a toll on regional geopolitics. On 23^rd March, while on a route tour of Tanga port, Kenya’s energy minister Charles Keter’s passport was confiscated and denied admittance to the port together with his entourage but Uganda’s Energy Minister Irene Muloni was given preferential treatment. This was all in retaliation to Kenya’s failure to invite the Tanzanian contingent during Ugandan officials’ tour of Lamu port in Kenya.

Citing security concerns in Kenya’s Turkana region, Uganda finally decided the pipeline will run further south to Tanga Port in Tanzania. The much anticipated announcement was the climax at the Northern Corridor Heads of State Summit. This came as no surprise however to many commentators as Tanzania’s President John Pombe Magufuli had already crowed over the 15,000 jobs to be created; plus Total E&P’s pledge to Uganda to fund the project.

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Source: CNBC Africa