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East African states plan single consultant for oil pipeline

05 June 2014, 10:36

Mombasa -  Kenya, Uganda and South Sudan are expected to invite bids this month for a single consultant to oversee the building of an oil pipeline to transport crude to the Kenyan coast, a senior Kenyan energy official said on Wednesday.

Uganda and Kenya have discovered commercial quantities of oil and aim to start production in the next three years or so.

Their neighbour, South Sudan, is a producer that now relies on a pipeline through Sudan but ties between those two states have been strained since they split from each other in 2011.

"What we want is to procure one supervisor for the entire pipeline so that the quality of the pipeline is the same," Joseph Njoroge, the Energy and Petroleum Ministry's principal secretary, told reporters.

"In two to three weeks we should see the advertisement for the consultant," he said on the sidelines of a meeting to discuss his ministry's five-year strategy to 2017.

East Africa has become hot property 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.

Uganda's reserves are put at about 3.5 billion barrels. Although the landlocked country plans to build a refinery, most of its production is expected to be exported.

Kenyan Energy and Petroleum Minister Davis Chirchir had said in April that the government was seeking expressions of interest for the pipeline in three segments - one from Ugandan fields to Lokichar, another from South Sudan to Lokichar and a third from Lokichar to the Kenyan coast at Lamu.

Analysts have said South Sudan, whose production has fallen by a third since December to about 165,000 barrels per day due to conflict, would need to find more oil reserves to justify the cost of building a second pipeline route to connect with Kenya.

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.

Njoroge said a legislation regulating the Kenyan oil and gas sector would be sent to parliament in July or August, instead of by the end of June as the ministry previously stated.

- Reuters


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