Uganda has confirmed at a summit in Kampala that it will build a pipeline from Uganda to Tanzania to export its oil, rather than Kenya.
The pipeline, which is expected to cost around $4 billion and create 15,000 jobs, will be around 800 miles long and will connect Uganda's western region near Hoima with Tanzania's port of Tanga, according to a report from the BBC.
The news follows the announcement March 2 that Uganda and Tanzania were planning to build a pipeline spanning across both countries, after the possibility of such a venture was raised last year. France's Total, one of the oil firms developing Uganda's fields, had warned of security concerns on the proposed Kenyan route, according to Reuters. Kenya's oil will be exported through a dedicated pipeline, according to a research note from First Energy.
Following the latest pipeline developments in Uganda and Kenya, First Energy suggested the news was “slightly negative” for companies such as Tullow Oil plc and Africa Oil Corp, which hold licenses across the latter country.
“The pipeline tariff to transport Kenya oil is likely to be higher than with a combined export route with Uganda,” said First Energy in a report sent to Rigzone.
“We however believe that the amount of oil resources discovered in Kenya supports a much larger plateau production than what Tullow and Africa Oil have indicated, likely to imply a reasonable tariff,” the report added.
Uganda and Kenya are yet to start commercial oil and gas production, but expect to do so by 2018.
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