Uganda Plans 250-Kilometer Oil Pipeline

By Nicholas Bariyo

KAMPALA Uganda--Uganda is planning to build a 250-kilometer pipeline to transport refined petroleum products from the Lake Albertine Rift basin to the capital Kampala, as the East African nation draws closer to commercializing its vast oil fields.

The country is seeking a strategic private investment partner to co-fund the project, estimated by the government to cost at least $220 million, and to take a stake of around 60%. The government will meet its share of the costs by drawing on the finance ministry's energy fund, Peter Lokeris, junior energy and minerals development minister, said.

Successful bidders will be announced by November to allow construction to start early next year.

Uganda's government has started receiving bids from consultants to provide financing and routing options for the project, a spokeswoman for the Petroleum Exploration and Production Department said. Consultants have been asked to "consider possible alternative routes and recommend the most optimal one," she said.

The project is one of many mid-stream and downstream facilities to be constructed in Uganda ahead of the development of vast oil fields along the country's western border with Congo, estimated to contain as much as 3.5 billion barrels of crude oil.

The pipeline will transport gasoline and diesel from a 30,000 barrels-a-day oil refinery, to be constructed in Hoima district, near the shores of Lake Albert. Uganda is currently in negotiations with South Korea's SK Energy Co. and Russia's RT-Global Resources, which both emerged as final bidders for the construction of the refinery. The refinery will process crude from the $2 billion Kingfisher oil field, which is expected to come on stream by 2018, said Mr. Lokeris.

China's largest offshore crude producer, Cnooc Ltd. (CEO) is developing the Kingfisher oil field. Cnooc jointly owns the field with U.K.-based Tullow Oil PLC (TLW.LN) and France's Total SA (TOT).

Crude output from Uganda is expected to peak at around 220,000 barrels-a-day by around 2020-21.

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