Uganda takes its oil to the market through Tanzania pipeline route

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Uganda is on track to realizing one of its primary strategic objectives: the construction of a pipeline that will help exploit the oil fields discovered ten years ago in the northwest of the country, specifically in the basin of Lake Albert, on the border with the Democratic Republic of Congo.

The decision announced at the end of the 13th summit of the partner states Northern Corridor Integration Projects (NCIP), held last weekend in Kampala, Uganda, puts an end to negotiations to determine the path of the pipeline.
The provision of infrastructure is particularly important for landlocked Uganda, which to begin exporting its oil must necessarily build a conduit cross-neighboring countries to reach the Indian Ocean coastline. The work will allow the exploitation of its considerable oil reserves that according to most recent estimates are about 6.5 billion barrels.
Kampala originally had deemed to pass the pipeline through the northern Kenya route, signing last August a memorandum of understanding with Nairobi to develop a pipeline that would reach the port of Lamu in the southeast of Kenya.
A few weeks later, however, it was considered the option of passing through Tanzania, measured more economical than Kenyan route, which had an estimated cost of about $ 4.5 billion.
The choice of the new route has also been supported by Total, one of the oil majors that since 2009, together with China National Offshore Oil Corporation and British Tullow Oil, holds the exploration rights to the Ugandan oil wells.
The French giant has pushed hard in favor of Tanzania, after repeatedly expressed its concern on the passage through the Kenyan border, considered dangerous because it is subject to possible attacks by Islamic Somali extremists’ al-Shabaab.
James Mataragio, managing director of the state-owned Tanzania Petroleum Development Corporation, has confirmed that the choice of Tanzania to implement the gas pipeline project is the result of an agreement between the Ugandan government and Total.

Why Uganda settled on Tanzania

The balances historic ties between the two countries also influenced Uganda’s decision. In 1986, the then Tanzanian President Ali Hassan Mwinyi firmly supported the accession to power of President Yoweri Museveni, contributing to the removal of his rival Milton Obote.
Not surprisingly, during the preliminary talks with President John Magufuli to the official agreement recognizing, Museveni had repeatedly implied that sharing the project with Tanzania is a “recognition” for the help received by African country in the past.
The plant will have an estimated cost of about $ 4 billion and its realization offering approximately 15,000 construction employees and between 1,000 and 2,000 permanent jobs. The pipeline will stretch for 1,120 kilometers to connect the northeastern Tanzanian port of Tanga with Buseruka sub-county, in Hoima District, locate in Uganda’s Western Region. According to Dodoma forecasts, the works for the construction of the work should be completed by mid-2020.
Once accomplished, the pipeline will be able to carry up to 200 thousand barrels of oil per day, also helping to increase by over 50% year on year foreign direct investment in Tanzania.
Uganda has favored the Tanzanian route for the convenience of the crude oil transport rate through the pipeline, which will be limited to $ 12.20 a barrel, although the two are yet to agree on a final levy in a project likely to be a public-private partnership.

Negative effects for Kenya

The Ugandan choice to share the project with Tanzania could deal a severe blow to the development plans of Nairobi, which relies heavily on oil resources for further growth of its economy.
The northern pipeline route that would bring oil in Kenya would be connected to LAPSSET project (Lamu Port-Southern Sudan-Ethiopia) that, under the plan “Vision 2030”, the Nairobi government is claiming to achieve a network roads and infrastructure to connect South Sudan and Ethiopia to the Kenyan port of Lamu, near the border with Somalia.
Once completed, the LAPSSET will be the second of the country’s transport corridor. However, after Kampala has chosen Tanzania to pump its oil, Kenya will be forced to look elsewhere for new funding to carry out its ambitious projects.

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