Tanzania agrees with Uganda to run oil pipeline to its coast

Tanzania and Uganda’s leaders agreed to build a crude pipeline linking their countries, connecting landlocked oilfields to the Indian Ocean, Tanzanian President John Magufuli said.

The proposed link will cover 1,120 kilometers (700 miles) and its construction will create 15,000 jobs, Magufuli said in a statement e-mailed by his office in Dar es Salaam, the commercial capital. Ugandan President Yoweri Museveni said on his Twitter account that he had “discussed plans” about the pipeline with Magufuli and that it would employ 1,500 people.

Tanzania is competing with neighboring Kenya for the pipeline that will tap Ugandan oil deposits being developed by companies including Total SA of France, China National Offshore Oil Corp. and London-based Tullow Oil Plc. Total Chief Executive Officer Patrick Pouyanne met Museveni in December and said his company preferred transporting crude via Tanzania. Tullow has also discovered oil in northern Kenya.

Decisions on the design and financing of the pipeline and a refinery have repeatedly pushed back the target date for producing Uganda’s first oil, after deposits were initially discovered a decade ago. Ernest Rubondo, head of Uganda’s Directorate of Petroleum, said last month the government would make a decision on the routing of the link in the first half. He didn’t answer calls on Wednesday when Bloomberg sought further comment.

Kenya estimates the cost of the pipeline would be about $4.5 billion. Estimates for the Tanzanian route haven’t been announced.

The alternate routes through Kenya would end at either the planned Lamu port, as part of the Lamu Port Southern Sudan-Ethiopia Transport corridor project, or the biggest harbor in East Africa, in Mombasa. Tanzania proposes building the pipeline to the port of Tanga.

 

– Bloomberg