AfDB willing to arrange Kenya oil pipeline financing

Politics and policy

Workers at a Tullow oil rig in Turkana. Kenya and Uganda have been haggling over which route to choose for an oil export pipeline that Kenya wants to run through its territory rather than neighbouring Tanzania. PHOTO | FILE 

By REUTERS

In Summary

• Resolving the pipeline route is vital in helping oil firms involved in Uganda and Kenya make a final investment decision on developing oil fields.

The African Development Bank (AfDB) is ready to act as a lead arranger for financing of Kenya's planned oil pipeline to move crude from fields in the far north county of Turkana, a senior official of the bank said on Friday.

Kenya and Uganda have been haggling over which route to choose for an oil export pipeline that Kenya wants to run through its territory rather than neighbouring Tanzania, where an alternate project backed by oil major Total, looks set to get the green light.

Officials from both countries have been crisscrossing the region, visiting facilities along the proposed routes, and holding meetings with executives of oil firms in order to reach a final decision.

"Whatever comes out of this conversation, one thing is for sure - Kenya will build a pipeline," said Gabriel Negatu, the Nairobi-based regional director of the AfDB.

He said South Sudan would probably link up with Kenya, just based on proximity, as both countries look to pipe its oil out to the world through the proposed port of Lamu, which formed part of a broader infrastructure development plan known as the Lamu Port Southern Sudan-Ethiopia Transport (LAPSSET) Corridor.

"We at the AFDB could consider financing a pipeline through our private sector window," Negatu said.

"We have said to the various parties who are interested in the pipeline that we would be happy to be the lead arranger to raise the financing for this pipeline, whichever way it goes."

Resolving the pipeline route is vital in helping oil firms involved in Uganda and Kenya make a final investment decision on developing oil fields.

There are no figures yet on costs, and production start dates have repeatedly been postponed, partly over pipeline considerations but also because of low oil prices.

"The numbers will have to make sense in the end. There are political risks and economic risks and those will have to be weighed and costed and the ultimate decision will be a sovereign decision," Negatu said.

He said the bank would soon grant millions of dollars to the secretariat of the LAPSSET Corridor project, so that they could expedite the development of Lamu port, as well as road and railway infrastructure.

READ: Turkana MPs vow to block oil drilling if pledges not fulfilled