Kampala, Uganda | – Tanzania and Uganda have signed an agreement that paves the way for studies to explore the possibility of building a pipeline to the Tanzanian port of Tanga.
Uganda has been looking at various options of developing the crude oil export pipeline, which include Hoima-Lacor-Lamu Port, Hoima-Nairobi-Mombasa, and now Hoima-Tanga.
Dr Fred Kabagambe-Kaliisa, Permanent Secretary of Uganda’s Ministry of Energy and Mineral Development, said the deal will help the parties to appraise the merits of a crude export pipeline option through Tanzania with a view to achieving the lowest unit transportation cost for crude oil from Uganda.
“If we get the least cost pipeline to Tanga, then our crude oil will be exported cheaply. We need to carry out due diligence, which requires technical work, to inform our citizens about the end-user tariffs and the memorandum of understanding sets the stage for carrying out detailed evaluation,” Dr Kabagambe-Kaliisa said.
The parties seek to identify and assess the least cost crude oil export pipeline from Hoima to the Tanga Port.
“The objective is to select a route that will result in the lowest unit transportation cost and constitutes the most viable option for the pipeline project,” the PS added.
The deal follows an earlier MoU signed between Uganda and international oil companies licensed in the country for the commercialisation of the newly discovered petroleum resources.
The new MoU features Total Exploration and Production Uganda and Tanzania Petroleum Development Corporation (TPDC).
Tanzania’s acting Permanent Secretary of Tanzania’s Ministry of Energy and Minerals Ngosi Mwihava said that Dar es Salaam this infrastructure will cement regional co-operation.
Oil companies in Uganda have been in discussions with Tanzania for an alternative pipeline route through Tanga despite the recent agreement between Presidents Yoweri Museveni and Uhuru Kenyatta to build one from Hoima to the Kenyan coast.
Uganda has no sea access and would benefit from a pipeline to a port where it could ship the oil production it expects to begin in 2017 or 2018.
In July, the government shortlisted 17 oil and gas companies for the country’s first competitive bid round.
The energy ministry will award six licences for exploration of the Albertine Graben region, which holds around 6.5 billion barrels of oil.
Oil was first discovered in the East African country in 2006, and the government expects production to begin by 2018.