Uganda is still considering transporting its crude oil through Tanzania instead of Kenya, as it could be a cheaper export route.
The government signed a MoU with the Tanzania Petroleum Development Corp. and Total SA to explore this alternative route for the proposed pipeline. Uganda’s Energy Ministry stated: “The objective is to select a route that will result in the lowest unit transportation cost.”
Despite Uganda discovering crude oil in 2006 – and 2010 in Kenya – both countries remain in the planning stage of commercial development for a pipeline. Uganda predicts it could hold resources of 6.5 billion bbls, whilst Kenya evaluates its resources at 600 million bbls – according to the US Energy Information Administration.
Ahmed Salim, Senior Associate at Teneo Intelligence stated: “Given the current oil price environment, it would be wise on part of the Ugandan government to make sure that any finalised agreement will be the most cost effective in a period where fiscal prudence should be a priority.”
Edited from various sources by Stephanie Roker
Sources: The Africa Report, Bloomberg, Citizen