Total Commits to Kenya Oil Pipeline After Backing Out Two Years Ago

Lamu-Lokichar oil pipeline
Total’s Momar Nguer and President Uhuru Kenyatta

In a surprising turn of events, Total SA has committed to invest an undisclosed amount in the new Ksh. 210 billion Lokichar – Lamu, Kenya oil pipeline after backing out of the venture two years ago.

Sometime ago, an article on The East African reported how Total had used its influence through several high-level meetings with the presidents of both Uganda and Tanzania to successfully convince the Dar es Salaam and Kampala administrations to choose the Uganda-Tanzania route over Kenya’s route.

Apparently, the decision to settle for the Uganda – Tanzania route was driven by concerns over the safety of the infrastructure which would be passing through the North and North Eastern parts of Kenya making it highly susceptible to Al shabaab attacks according to a report referenced by Total.

However, it seems that these concerns have since been laid to rest after a meeting between President Uhuru Kenyatta and Total’s executive committee member and president for marketing and services Momar Nguer. With the closure of the new deal, Total has now been cleared to buy shares in Maersk Oil blocks in Kenya according to State House spokesperson Manoah Esispisu.

Now that Total has once again decided to come on board, Kenyans should be hopeful that the slew of delays which plagued the project will take a back seat and work will finally begin.

Britain’s Tullow Oil which was one of the first companies to discover commercially viable oil deposits in the country had signed a joint venture agreement with the government together with two other partners (Africa Oil and A.P. Moller-Maersk) that would see them start development of the Front-End Engineering Design (FEED) program in the second half of 2017.

This would set the stage for the actual construction of the 890-kilometre pipeline from this year with completion slated for about 2020, but the extended electioneering period most likely put a dent in those plans.

The most recent estimates put Kenya’s recoverable reserves at around 750 million barrels which are considered viable for production at $55 per barrel. Taking into account the fact that the current price of crude has rallied to about $69 per barrel, this could be another reason that explains why Total decided to do a turnaround and commit to Kenya’s oil pipeline.

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Business geek with a special interest on doing business in Kenya.