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Economy

Total opts for Tanzania oil route despite talks

Energy PS Joseph Njoroge. PHOTO | SALATON NJAU
Energy PS Joseph Njoroge. PHOTO | SALATON NJAU 

French oil giant Total has affirmed its commitment to construct the $4 billion (Sh406 billion) pipeline through Tanga despite the push by Kenya to have Uganda ship its crude oil through the Lamu port.

Total E&P Uganda general manager Adewale Fayemi said the French giant has made the decision to have the pipeline run through Tanzania despite talks between Uganda and Kenya.

“As a company, our position remains that we are going through Tanga…I understand there are issues being discussed but our position remains the same,” said Mr Fayemi said on Wednesday while attending a two-day East Africa Oil and Gas conference in Tanzania.

He said all available options had been carefully considered and the firm is more interested in the Tanga route, which will be cheaper for oil production than the Kenyan option.

Total is UK Tullow Oil’s partner in the Ugandan oil fields and the main financier of the operations. China National Offshore Oil Companies is also a partner. The firms are eyeing production of an estimated 6.5 billion barrels of Uganda’s crude oil by 2018.

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Kenya Thursday put on a brave face in light of the Total’s position. “We will build an oil pipeline, whether we are together with the Ugandans or not,” said Energy PS Joseph Njoroge.

Total’s stand on the issue comes as President Uhuru Kenyatta considers negotiating for the Lamu route through his host President François Hollande during his April trip to France.

At the moment, Kenya and Ugandan officials are touring Lamu and Lokichar following a decision by President Kenyatta and Uganda’s Yoweri Museveni, to have all possible routes reviewed and harmonised.

In the tour, the team is looking at the terrain, technical and economic aspects of three possible routes through Tanga, Lamu or Mombasa port.

President Museveni on March 21 in Nairobi delayed making a final decision on the proposed shipping of its crude oil through Lamu port setting up Kenya and Tanzania for intense rivalry in their quest to become the preferred regional trade and transport hub.

The Nairobi meeting came just weeks after President Museveni and his Tanzanian counterpart John Magufuli reached a deal to build a 1,120-kilometre oil pipeline between Tanga and Uganda where an estimated 6.5 billion barrels of oil were discovered in the Albertine basin near the border with Democratic Republic of Congo.

The twist of events rattled Kenya, which now finds itself in a head-to-head competition with Tanzania to win Uganda’s decision to have its oil exported through Kenyan territory.

Tanzania has previously been labelled a “lone ranger” among East African Community partners on key integration issues such as trade and infrastructure development — a tag it sought to shed-off with the Uganda pipeline deal.

Although Uganda said in August 2015 that it had agreed upon the Kenyan route, it changed its stand and said Nairobi had to guarantee security for the pipeline, along with financing and cheaper fees than alternatives.

Total has previously also raised security concerns over the Kenyan route which would run through the volatile north eastern region where militant groups such as the Al Shabaab remain a threat.

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