East African Nations Seek Consultant for Crude Oil Pipeline

Source: Reuters 6/25/2014, Location: Africa

Kenya, Uganda and Rwanda have invited bids for a single consultant to oversee a feasibility study and initial design for the construction of a 1,300-kilometre (808-mile) oil pipeline to transport crude to the Kenyan coast. Uganda and Kenya have discovered commercial quantities of oil and plan to start production in the next three years or so.

Kenya's Ministry of Energy and Petroleum said in addition to the pipeline, the consultant would be required to oversee the construction of a fibre optic cable from Hoima in Uganda through the Lokichar basin in northwest Kenya to Lamu, and tank terminals in Hoima, Lokichar and Lamu. It said in an advertisement published in Kenya's Daily Nation newspaper that will also involve the construction of a 9-km pipeline from the Lamu tank terminal to an offshore mooring buoys. "The pipeline is to be developed as a single project but split into two lots namely Hoima to the Uganda/Kenya border and from the border to Lamu," the ministry said, adding that interested companies and consortia had until July 25 to submit proposals.

The ministry's principal secretary, Joseph Njoroge, said this month the aim of having a single consultant for the whole project was to ensure consistency in the quality of the whole pipeline.

East Africa has become potentially lucrative for international oil firms after Kenya and Uganda's commercial oil finds and discoveries of gas off the coast of Tanzania and Mozambique. Tullow Oil and Africa Oil, which control blocks in Kenya, have estimated discoveries in the South Lokichar basin at 600 million barrels, a level experts say is enough to make a pipeline viable even without Uganda. The two companies said they had found additional oil and gas reserves at their northwest Kenya blocks. Uganda estimates it has oil reserves of 3.5 billion barrels.

The plan for a single consultant and transaction adviser was approved by the governments of Kenya, Uganda, Rwanda, South Sudan, Tanzania and Burundi in early May. Those countries make up the East African Community, although South Sudan is still only an applicant to join the group.

Kenya's plans for oil production have moved fast since Tullow and Africa Oil's first discoveries were announced in March 2012. In contrast, neighbouring Uganda struck oil in the Albertine rift basin in 2006 but commercial production has been delayed by wrangling with oil firms over Uganda's plans for a refinery and other factors and is not expected until 2016 at the earliest.

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