Total Remains Non-committal on Oil Export Pipeline Investment

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In short
Ahlem in the email indicated that the investment in the pipeline is not necessarily limited to Total E&P, Tullow and CNOOC but to other interested companies.

Oil Explorers Total E&P remain non committal on the plan to invest in a crude oil export pipeline even after Tullow Oil executives made it clear that they were not interested in the venture.

In an email to URN, Ahlem Friga-Noy, the Corporate Affairs Manager, Total E&P Uganda said that the companies - Tullow, Total and CNOOC - have “the responsibility to develop the crude export pipeline.” Our question on whether they would invest it in the pipeline remained unanswered.

The Ugandan government in early February signed a Memorandum of Understanding with the three oil companies. The MoU states the role of government as developing the oil refinery whereas oil companies committed to the export pipeline. Tullow has made it clear that it not interested in investing in the export pipeline.

Ahlem in the email indicated that the investment in the pipeline is not necessarily limited to Total E&P, Tullow and CNOOC but to other interested companies.

The exact cost of the export pipeline is not yet known, as studies on the feasibility of the project have to be done.

According to the MOU details released through official channels, the pipeline would stretch from the Albertine region to Kenya, through Lokichar, in Kenya.

She noted that the signing of the MoU means that there is a clear timeline on when projects should be completed, giving a clear picture on the date of actual production.

“With the signing of the MoU, we believe that the process of determining the details pertaining to investment and construction of the pipeline will be expedited in order to enable the Partners and then Government meet the targeted delivery timelines.”

The timeline on the completion of the oil refinery is 2018.

Currently, government is sourcing for a majority investor in the refinery. Seven consortia were shortlisted to submit the proposals.

The finer details of the MoU remain confidential, but Ahlem indicates that they [Total E&P] will fully support the government in its 30,000 barrels per day refinery. Ahlem explains the commitment made:

“In particular, the oil companies will have to supply the refinery on the basis of what we call the first call, which means that the refinery will get the priority of the supply of crude.”

The government on the other hand has to discuss with Kenya on the route of the pipeline.  At a meeting of the leaders of Kenya, Uganda, Rwanda and South Sudan on Thursday, a joint communiqué directed ministers to start negotiations on this pipeline.

The presidents directed the ministries to meet and consult on building the Lokichar [border with Kenya and South Sudan] – Lamu crude export pipeline. They also gave the green light to Kenya can proceed with the process of seeking for Expression Of Interest (EOI) “for the construction of a crude oil pipeline from Lokichar to Lamu, with effect from March 2014.”