Uganda’s pipeline deal with Tanzania is standing in the way of a detailed feasibility study that will determine financing for the $4 billion Kenya-Uganda crude oil pipeline.
The detailed study was to begin in September but procurement for the designer has been delayed.
The initial feasibility study by Toyota Tsusho indicated the pipeline should be complete by the second quarter of 2017.
“Kenya is keen to start the detailed feasibility study now. Uganda wants more clarifications on the route before going into it,” said Mr Joe Nyaga, who is in charge of Northern Corridor Integration Projects in Kenya.
Meanwhile, Uganda is keen on the feasibility study of the Tanzanian route.
Already, Uganda, Tanzania, Tanzanian Petroleum Development Corporation and Total E&P Uganda have been bound under an agreement that dictates the crude oil pipeline development principles.
The agreement was signed on October 12.
On August 10, both President Uhuru Kenyatta and Yoweri Museveni signed an agreement stating that they had settled on the northern route through Hoima to Lamu.
“States must involve upstream oil companies in determining the pipeline route and the definition and structuring of a Public-Private Partnership (PPP) Project,” the presidents of Uganda, Kenya, South Sudan and Rwanda directed on October 17.
Tullow Oil’s chief executive Aidan Heavey told Reuters they would make an investment decision in 2017, but expect the first oil production in Kenya to come through in 2020.
Kenya expects to produce its first oil by 2022 though the target date could be pushed further if Uganda continues exploring alternative interests.
Total E&P Uganda oil company has focused on the southern route and has initiated a feasibility study, leaving an opportunity for Kenya to join in.
“We are interested in the least costly route, Tanzania provides the option,” Total Corporate Affairs Manager Ahlem Friga Noy said on Tuesday.
At the 11th Northern Corridor summit this month, Uganda and Kenya both agreed to have one voice on the pipeline route.
Uganda was, however, seen as delaying the decision to begin the detailed feasibility design for the crude oil pipeline through Hoima-Lokichar.
“There is a delay because of the feasibility study, once this is complete we will move fast, both Kenya and Uganda have set up a security team to tackle the issue of insecurity,” said Mr Nyaga.