February 5, 2016

Kenya Kept in the Dark as Tanzania Agrees With Uganda to Run Oil Pipeline to Its Coast,

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  • Tanzanian route is possible alternative to one via Kenya
  • Kenyan government hasn’t been informed of Tanzania agreement

Tanzania and Uganda’s leaders agreed to build a crude pipeline linking their countries, connecting landlocked oilfields to the Indian Ocean, Tanzanian President John Magufuli said.

The proposed link will cover 1,120 kilometers (700 miles) and its construction will create 15,000 jobs, Magufuli said in a statement e-mailed by his office in Dar es Salaam, the commercial capital. The heated pipeline will cost about $4 billion and the two countries’ government plan to “move very fast” to implement the project, said James Mataragio, managing director of the state-owned Tanzania Petroleum Development Corp.

“We have a meeting with our counterparts next week to execute the project,” Mataragio said by phone from Dar es Salaam. “So after next week, that’s when most of the details will come out.”

 Tanzania is competing with neighboring Kenya for the pipeline that will tap Ugandan oil deposits being developed by companies including Total SA of France, China National Offshore Oil Corp. and London-based Tullow Oil Plc. Total Chief Executive Officer Patrick Pouyanne met Ugandan President Yoweri Museveni in December and said his company preferred transporting crude via Tanzania. Tullow has also discovered oil in northern Kenya.

Museveni said Tuesday on his Twitter account that he had “discussed plans” about the pipeline with Magufuli and that it would employ 1,500 people.

Delayed Decision

Uganda’s government said in October it was considering sending its crude through Tanzania as a lower cost option to the Kenya route. Kenya projects the cost of the pipeline would be about $4.5 billion.

Decisions on the design and financing of the pipeline and a refinery have repeatedly pushed back the target date for producing Uganda’s first oil, after deposits were initially discovered a decade ago. Ernest Rubondo, head of Uganda’s Directorate of Petroleum, said last month the government would make a decision on the routing of the link in the first half. He didn’t answer calls on Wednesday when Bloomberg sought further comment.

Bukenya Matovu, a spokesman for Uganda’s energy ministry, said he didn’t know whether the agreement with Tanzania was a final decision and that such a project would need a bilateral agreement. “Maybe that is one thing they talked about,” Matovu said by phone.

Close Relationship

Uganda is interested in the Tanzanian route because “it is shorter and more secure in light of what is happening in Somalia,” Matovu said. One of the routes proposed by Kenya would be through it’s northern territory to the coastal town of Lamu. Those areas are close to Somalia, where Islamist militants have been waging an insurgency against the government for the past decade. The al-Qaeda-linked fighters have also carried out attacks within Kenya.

The Kenyan energy ministry is unaware of the Tanzanian agreement with Uganda, Permanent Secretary Joseph Njoroge said on Wednesday. Such a decision wouldn’t have been made without Museveni notifying Kenyan President Uhuru Kenyatta first because the two leaders have a close relationship, said a Kenyan government official who asked not to be identified in line with government policy.

Estimates for the Tanzanian route, which would end at the northeastern port of Tanga, haven’t been announced.


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