Africa Oil & Gas: South Sudan May Not Be Keen On Kenya’s Pipeline Deal

Africa Oil & Gas: South Sudan May Not Be Keen On Kenya’s Pipeline Deal

South Sudan may not be  keen on an oil pipeline deal with Kenya despite frantic effort from its neighbor to seal an agreement with the Africa’s youngest nation that would see the two nation construct a multi-billion dollar pipeline to the Lamu port.

According to The East Africa, the Juba-based government is still awaiting the outcome of talks with Sudan over transfer costs before it makes any decision.

Last week, AFKInsider reported that East Africa’s largest economy was in a race against time to win the full backing of the Africa’s newest nation for its planned $2.5 billion crude pipeline after Uganda pulled a plug on an earlier deal for a joint petroleum project with Nairobi.

South Sudan’s Trade Minister, Stephen Dau, told the East African that he was aware of Kenya’s plans for the northern corridor pipeline, but he had not received any official communication over the issue from Kenya.

“Once we have a proposal, our technical teams will meet and advise on the right way forward,” Dau said, adding that South Sudan was part of the initial talks to partner in construction of the Kenyan line but left “once alternative options came up”.

It is expected that Sudan will cut transit fee for South Sudan’s oil to $18 per barrel, from the previous $24 per barrel, due to the fall in crude prices on the international market.

Uganda, which has almost ten-folds more oil reserves than Kenya, opted out of a deal to construct the pipeline to the Lamu port, citing concerns over security of the infrastructure considering the proximity to the Southern Somalia border where Islamic militants Alshabab have their strongholds.

In response, Kenya  said it would immediately embark on the construction of its own pipeline—ending months of spirited attempts to woo Uganda into the joint project it was to pursue with other regional states under a public-private partnership (PPP) model.

Analysts said the success of the pipeline project linking Kenyan discoveries in Lokichar Basin to Lamu on the north coast will highly depend on the volume of products moved hence the need to court the Juba administration.

Uganda has an estimated 6.5 billion barrels of oil in the Albertine basin near the border with Democratic Republic of Congo, while Kenya only has about 900 million barrels.