Uganda agrees to plan for oil pipeline to new Kenya port

Tue Jun 25, 2013 12:33pm EDT

Related Topics

* Uganda, Kenya, Rwanda presidents met in Kampala

* New oil pipeline to boost Kenya's Lamu port plans

* Three states want to upgrade, extend an existing pipeline

By Elias Biryabarema

KAMPALA, June 25 (Reuters) - Uganda has agreed to a plan to build a pipeline from its oilfields to a new port being developed on Kenya's northern coast, Uganda's foreign minister said on Tuesday, enabling crude exports and boosting its oil industry.

The pipeline to Kenya's Lamu port, where work on berths is starting, would also provide a route to export crude oil from South Sudan, which now relies on a pipeline through its northern neighbour Sudan. Rows between the two have disrupted flows.

Uganda, Kenya and other East African states want to capitalise on a string of oil and gas finds across the region that could make the area a major energy exporter. But production has been delayed, partly due to questions of export routes.

Another project agreed by the presidents of Uganda, Kenya and Rwanda, who all met in the Ugandan capital, will involve extending to Uganda and Rwanda an existing pipeline running from Kenya's Mombasa port that now stops inside Kenya.

"It was agreed that we develop two oil pipelines - one pipeline that currently exists and brings products from Mombasa to Eldoret (in Kenya) should be extended to Kampala and Rwanda," Ugandan Foreign Minister Sam Kutesa told a news conference after the summit between Uganda's Yoweri Museveni, Kenya's Uhuru Kenyatta and Rwanda's Paul Kagame.

He did not provide figures for the date or the cost of completing the projects.

South Sudan previously put the price of a pipeline to Lamu at $3 billion.

Extending the Mombasa-to-Eldoret produce pipeline to Uganda was previously estimated to cost $300 million.

The product pipeline will be upgraded to allow the flow both ways, the minister said. For now, oil products only flow from Mombasa. Uganda, which plans to start crude output by 2016, aims to build a 30,000 barrel per day refinery by 2016/17.

"Another pipeline will be constructed and will be for evacuation of crude oil when it starts flowing, and this again will be done between Uganda, South Sudan and Kenya, ending up at the port of Lamu," the minister said.

That project could boost plans for Lamu, which Kenya wants to act as an oil terminal and a port with transport links to landlocked South Sudan and Ethiopia. It would also relieve pressure on Mombasa port, the main regional gateway.

South Sudan, which now exports crude through Sudan to the Red Sea, previously discussed a pipeline through Kenya as well as a route through Ethiopia to Djibouti.

Kenya has already awarded a contract to a Chinese firm to build the first three berths at Lamu.

Uganda, Kenya and Rwanda also agreed to revamp an existing railway network and extend it to Rwanda and discussed power cooperation, the minister said, adding the three states would meet every two months to review progress on all joint projects. (Writing by Edmund Blair and George Obulutsa; editing by Jane Baird)

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