Uganda is exploring a new pipeline option to transport its crude oil to a separate port at Lamu in Kenya, according to an official in the Ministry of Energy.
The new option is boosted by the prospect of establishing a separate port from the presently congested Mombasa Port. Previously, there were considerations to transport the crude oil from Uganda through a pipeline constructed along the existing railway lines either to Mombasa or Dar es Salaam.
Kabagambe Kaliisa, the Permanent Secretary in the Ministry of Energy and Mineral Development, says that the new pipeline option would move from Hoima through the Turkana area in Kenya to the Port of Lamu. However, the option is still awaiting a decision after reviewing results of a feasibility study, which Toyota Tsusho, a Japanese company is conducting. The South Sudanese government has also contracted the same company to explore possibilities of constructing a 2,000 kilometre pipeline to export its crude oil to the port of Lamu.
Kabagambe says the route provides an attractive feature and would be cheaper because it connects to a planned pipeline from South Sudan and continues eastwards to Lamu Port. He said the result of the study would be compared with the first two options before deciding on the most appropriate oil export route.
He also explained that a separate port to handle oil exports from the region would be most appropriate adding that the current facility at Mombasa presents many challenges, which the Lamu facility would address.
PS Kabagambe however explained that the establishment of a local refinery would precede the construction of an oil pipeline. He said oil companies could also construct the pipeline in anticipation of more oil discoveries in the country, which would guarantee export of the surplus from local consumption.
The government stance to build a local refinery has attracted disagreement from the oil companies operating in the country. Jimmy Mugerwa, the Managing Director of Tullow Oil Uganda, recently said the country lacked the capacity to put up a refinery adding that constructing a pipeline was a better option for the land-locked country.
A 2008 report by the East African Community Secretariat on the Strategy for the Development of Regional Refineries, suggested a Southern Sudan pipeline as a future plan to transport crude oil from the country to the East Coast.
While it recommended the establishment of an oil refinery in Uganda, the report also said the Eldoret-Kampala pipeline project needed to proceed as a priority and that the enhancement of the Mombasa-Nairobi pipeline needed to be fast-tracked.
Uganda presently has 3.5 billion barrels of oil with a recoverable capacity of about 1.2 billion barrels. Government says it plans to begin production by 2016.