Signing of the Joint Development Agreement (JDA) a fortnight ago between the government and three Turkana oil investors; Tullow, Africa Oil and Maersk, is a significant step towards achieving the Lamu Port-South Sudan-Ethiopia-Transport (LAPSSET) corridor crude oil pipeline project.
The JDA opens the way for funds to be committed on more detailed engineering designs and environmental studies.
The pact affirms the government’s commitment to building the pipeline, one of numerous components of the wider LAPSSET project whose history dates back to 2011 when a feasibility report was adopted by the Cabinet.
Former President Mwai Kibaki, frustrated by slow progress on the project, had summoned all ministries and State corporations with links to the LAPSSET project to KICC in Nairobi to receive the consultant’s report.
I was present as part of the consultant’s team with responsibility for the refinery and oil products pipeline study. After the consultant’s presentation Mr Kibaki summed everything up in a few decisive sentences.
“The government has adopted the report and every ministry and parastatal should implement parts of the project related to them. The co-ordination of the project implementation should pass from the Ministry of Transportation to the Office of the Prime Minister.”
The president stated that the justification for LAPSSET was economic opening up of the marginalised northern Kenya, while addressing insecurity. This is why the LAPSSET project should be seen as an integrated national economic development programme for northern Kenya to be achieved over time. The crude oil pipeline is a major part of this development programme.
The LAPSSET feasibility study was done in 2010/11 when Kenya had not discovered oil. The study was premised on a crude oil export pipeline from South Sudan together with other infrastructure (highway and rail) from Lamu to South Sudan. For whatever political reasons, the Kibaki government had omitted Uganda oil discoveries in the study terms of reference.
The key study assumption was that after independence, South Sudan would not export its oil via Port Sudan in the north, and that the new nation would require a “politically safe” alternative route via Lamu.
When the consultants met South Sudanese officials in Juba in mid 2010, we did not get definite confirmation of future oil export routes. When South Sudan finally gained independence in 2011 the country struck a deal with Khartoum to use existing pipelines via Port Sudan.
Kenya discovered oil at Lokichar in Turkana in March 2012 — coincidentally at a location where the pipeline from Juba was planned to pass. The other coincidence was that the Turkana oil discovery was by Tullow Oil who had significant oil finds in Uganda. The idea of a joint pipeline quickly gained momentum driven mainly by Tullow Oil.
Then in mid 2013 President Uhuru Kenyatta entered the scene with a development plan focused on regional infrastructure. The political rapport with President Yoweri Museveni led to the adoption of the Hoima-Lokichar-Lamu pipeline for joint Uganda/Kenya crude oil exports.
By this time , Total had acquired a third of Tullow oil interests in Uganda and was soon poking holes in the joint venture plans, mainly on account of perceived northern Kenya insecurity.
Total eventually managed to convince the Uganda government to export oil via Tanzania, and Kenya had to go it alone. As all this was happening, global oil prices collapsed and this slowed pipeline investment decisions.
Total has recently re-appeared in the Turkana oil basin through the purchase of Maersk’s 25 per cent interests.
Although Total did not participate in the signing of the JDA, one cannot entirely discount future opinions and actions by the multinational. In the meantime with the JDA, design works can commence.
The pipeline is only one component of the larger LAPSSET corridor project. The other components are already work in progress.
Guided by the economic policy of using LAPSSET to open up northern Kenya, it is important that stakeholder counties support and facilitate implementation of the LAPSSET corridor projects, including the oil pipeline.