Uganda/Kenya New Petroleum Refinery

Uganda Oil

Dow Jones–Uganda and Kenya are considering forming a joint venture to build and operate a petroleum refinery, as well as an oil pipeline connecting landlocked Uganda to the Kenyan port of Mombasa, the Ugandan presidency said Monday.A presidential spokesman said in a statement that President Yoweri Museveni held talks with a Kenya government delegation led by Kenya’s Minister of Foreign Affairs, Moses Wetangula and Prashant Ruia, the chief executive of India-based Essar Group, which operates Kenya’s Mombasa refinery.

The talks centered on proposals to form a joint venture to build a refinery and the extension of the Mombasa-Eldoret oil pipe line to Uganda’s oil region in the Lake Albert basin.Kenya’s Energy Minister, Kiraito Murungi who also attended the meeting was quoted as saying that there was no need for Kenya to import oil from the Middle East when Uganda has the capacity to supply them.Uganda has discovered at least a billion barrels of oil in its Lake Albert basin and plans are underway to commence oil production.

Last month, Swiss-based Foster Wheeler completed a feasibility study on the building of a 150,000 barrels-a-day oil refinery in Uganda and government is now finalizing arrangements to come up with a financing and shareholding structure in the refinery, according to Kalisa Kabagame, Uganda’s permanent secretary at the Ministry of Energy and Minerals Development.

Uganda and Kenya have also been in talks for the extension and upgrades on the Mombasa-Eldoret oil pipeline to Uganda. Currently, Uganda relies on the pipeline to import refined fuel products.The Ugandan government wants the pipeline upgraded and equipped with a reverse flow to enable it to transport refined fuel products in future for export from Uganda to the port of Mombasa.According to U.K.’s Tullow Oil PLC (TLW.LN), which operates block 2 in the Lake Albert basin, Uganda can produce up to 350,000 barrels of oil-a-day by 2018 if the right development plan is adopted.

-By Nicholas Bariyo, contributing to Dow Jones Newswires; 256-75-2624615