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Six firms submit plans for oil pipeline linking three East Africa states

Toyotsu Auto Mart, a subsidiary of Toyota Tsusho Company Limited, in Nairobi's south C.

Toyotsu Auto Mart, a subsidiary of Toyota Tsusho Company Limited, in Nairobi’s south C.

Six consortiums have submitted designs for the construction of the crude oil pipeline connecting the oilfields in Uganda, South Sudan, and Kenya to the Lamu port.

The Hoima-Lokichar-Lamu crude oil pipeline, a joint project between the three countries, is expected to be completed in 2018.

The bidders are Tullow Oil/Africa Oil, who have submitted a design for the Lokichar-Lamu route, Toyota Tsusho (Hoima-Manda Bay, Lamu), Tullow/Total/CNOOC (Hoima-Lokichar-Lamu), Lapsset (Juba-Lokichar-Moyale-Lamu), Total (Hoima-Eldoret-Lamu/Mombasa).

SEEKS TO EXPEDITE

The final decision is expected to be made based on the most economically viable route.

Uganda is said to be rooting for the Hoima-Eldoret-Lamu/Mombasa route as it seeks to expedite the monetisation of its resources.

This comes in the wake of the country’s realisation that the construction of its 30,000-barrels-a-day refinery may be further delayed by deliberations on whether to pump crude oil or refine it in Uganda.

Kenya’s western neighbour also argues that the northern route, which goes to the Turkana oilfields, is costly as it adds an extra 900 kilometres to the coastline.

However, Kenya’s position is that the Uganda option — the Southern Corridor — is not viable as there is little or no deposit along the route.

FINANCIAL ARRANGEMENT

“The objective of the Lapsset/Northern Corridor was based on the location of the oil blocks and oil finds to the north of the country near the border with South Sudan within Lamu,” said an expert who did not want to be named because he is not authorised to speak for the government.

At the EAC Heads of State summit in Kigali on Thursday, five governments plus Ethiopia but excluding Tanzania agreed to expedite the project with the proposal to contractors expected to be endorsed by Wednesday next week.

“Uganda is to submit comments on the Request for Proposal (RFP) to the project steering committee for approval by 10 July, 2014, and issuance of an addendum to the RFP by 11 July, 2014,” read the joint communique issued on Thursday evening.

“The partner states to determine their financing arrangement by the end of January, 2015.”

PUMPING STATIONS

Last week, Kenya, Uganda, and Rwanda started the search for a consultant to supervise the implementation of the crude oil conduit, days after more discoveries of oil and natural gas in Lokichar, Lamu, and Wajir counties by various prospectors.

In the plan, a 1,300-km crude oil pipeline and fibre-optic cable will be laid from Hoima and tank terminals as well as pumping stations will be built in Lamu and Lokichar. It will be developed in two parts — from Hoima to the Uganda-Kenya border and from the border to Lamu.

Essentially, the proposed pipeline will be used to export crude oil from Kenya and Uganda to the Lamu port.

To be laid between Lokichar and Lamu, the pipeline will run within the planned Lamu Port South Sudan Ethiopia Transport (Lapsset) Corridor.

INDEPENDENT STUDIES

While most of the proposals have adopted the build, own, operate, transfer (BOOT) model, it is understood that Kenya, Uganda, and Rwanda, which have agreed to jointly undertake their pipeline and associated infrastructure, prefer the engineering procurement, and construction (EPC) option, where the contractor will undertake the construction and hand over the project on completion, testing, and commissioning.

There have been seven independent studies on the Northern Kenya Transport Corridor under the Lapsset project.

The pipeline is one component of the seven projects.

The consultant is expected to investigate the technical, financial, and economic viability of the project by reviewing existing data and conducting feasibility studies on the crude oil pipeline.

-Nation

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