November 11, 2016 / 8:02 AM / in a year

Tanzania, Uganda agree to speed up oil pipeline project

DAR ES SALAAM (Reuters) - Tanzania has agreed with Uganda to accelerate implementation of a crude oil pipeline project between the two east African nations and award the construction contract to multiple contractors.

A worker stands on the fourth floor of a new building that will house the Lamu port headquarters, which will oversee the construction of the new port project along the Kenyan coast, April 17, 2013. A mega-port project on the north Kenyan coast conceived in the 1970s may finally be gaining traction based on commercial oil finds in Uganda and Kenya, but needs more financing to compete with a Chinese-backed port in Tanzania and other rivals. Initial work has started on a mangrove coast near the ancient Arab trading post of Lamu that could in a few years be a bustling container port and crude terminal, creating an export hub for fast-growing east African states and their oil. But Kenya must shore up regional commitment for the $25.5 billion Lamu Port-South Sudan-Ethiopia Transport (LAPSSET) plan that by 2030 envisages a port, new roads, a railway and pipeline. Picture taken April 17, 2013. REUTERS/Anjali Nayar

The decision was reached during talks between Tanzanian President John Magufuli and his Ugandan counterpart, Yoweri Museveni, in Kampala on Thursday, Magufuli’s office said in a statement on Thursday.

Uganda said in April it would build a pipeline for its oil through Tanzania rather than Kenya, which had wanted to secure the export route.

Picking a route is vital for oil firms to make final investment decisions on developing reserves found in Uganda and Kenya, which are among a string of hydrocarbon finds on Africa’s eastern seaboard. Tanzania has found gas offshore.

“I suggest we use the design and construct model to speed up implementation of the 1,410-km pipeline project ... and award contracts to five or six different contractors to build different sections of the pipeline at the same time,” Magufuli’s office quoted him as saying.

“By doing that we will significantly reduce the time needed to build the oil pipeline and the entire project can be completed within just one year.”

Uganda discovered crude near its border with the Democratic Republic of Congo 10 years ago, but has yet to start production after repeated delays. Choosing a route to export the crude from the land-locked nation is a vital step.

France’s Total, London-listed Tullow Oil and China’s CNOOC have been pushing for a decision on a pipeline.

Reporting by Fumbuka Ng'wanakilala; Editing by George Obulutsa and Susan Thomas

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