By NICHOLAS BARIYO
KAMPALA, Uganda -- The Ugandan government is considering
approving construction of a 120,000 bpd
pipeline to export crude oil via the East African coast once
crude drilling starts in the country's oil-rich Lake Albertine
rift basin, the energy and minerals ministry said Tuesday.
The country is planning to build a 30,000 bpd refinery to produce refined fuel
products for the local market, allowing the pipeline to
transport additional crude to export markets through
neighboring Kenya, according to Kalisa Kabagambe, the
ministry's permanent secretary.
After months of back-and-forth negotiations, Uganda is
closing in on a deal with UK-based Tullow Oil and its
joint venture partners, Total and China's Cnooc over the oil
development plans and refining options for its vast crude
reserves, which could unlock investments worth more than $12
billion in the country.
"One of the key considerations in determining these
capacities is the need to ensure efficient management of the
resource by producing at levels that enable the country to
maintain the integrity of the petroleum reservoirs," Mr.
Uganda has at least 3.5 billion bbl of crude reserves
along its western border with Congo and estimates daily crude
output to reach up to 200,000 bbl at peak production. The
country will upgrade its refinery to double its capacity once
it attains peak crude output, Mr. Kabagambe said.
Earlier this month, government agreed with oil companies to
start with a 30,000 bpd refinery, much lower than its
earlier demand of a 180,000 bpd refinery, breaking a nearly
two-year deadlock that has been blamed for delaying the
development of the country's oil fields.
In February, Total warned that its Uganda project would stall, unless a crude
pipeline was approved.
Company officials couldn't comment immediately.
After agreeing the refinery size, the two sides have to
agree on the capacity of the pipeline as well as production
levels, before signing a memorandum of understanding, to pave
way for the development of the country's nascent oil sector. A
deal on outstanding issues is close, Mr. Kabagambe said.
Dow Jones Newswires