A study by two international oil firms, warning of a possible delay in the completion of an oil pipeline, was at the centre of talks between Presidents Uhuru Kenyatta and Yoweri Museveni at State House, Nairobi, on Monday.
Sources within the Energy sector said that Tullow Oil plc and China National Offshore Oil Company (CNOOC) had a carried out research, whose findings warned Uganda against going ahead with its plan to construct the Northern Pipeline from Hoima through Lokichar to the Lamu Port.
It was understood that two firms, working together with French oil company Total, warned that Uganda’s plans to start extracting crude oil for export in 2018 could be delayed if it goes ahead with the Kenya deal.
Monday, President Museveni and his delegation presented the findings of the research to the Kenyan team led by President Kenyatta to justify Kampala’s recent decision to shift its focus to Tanzania, a route, which is much longer than the Kenyan option.
PROTRACTED DISPUTES
Sources said the study warned that Kenya has had a history of protracted land compensations, which would delay the construction of the pipeline from Lokichar to Lamu.
“Uganda’s concern was that research by Tullow and CNOOC suggested that land compensation could be major factor in delaying the construction of the northern pipeline,” said a source who attended the meeting.
The study pointed to the bitter disputes involved in the acquisition of land for the Lamu Port Southern Sudan-EthiopiaTransport (Lapsset) and in the construction of the Standard Gauge Railway (SGR).
This, they warned, could also lead to higher costs because landowners were known to drive the prices high ahead of projects.
In its presentation, Uganda also referred to the findings in the study, indicating that the area along the proposed pipeline route does not have well-developed roads and that this could hinder construction.
The study had also stated that the Lamu Port was yet to be built and warned that it might not be completed by 2018, when Uganda will be ready to start exporting its crude oil.
As an alternative, it proposed that Uganda enter into a deal with Tanzania, whose Tanga Port only requires only a few adjustments and will be ready to start receiving crude oil.
“They said that the Lamu Port needs to be built and this could delay,” said the source.