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Here Is Why Uganda’s Dream Of Oil Export Will Be Delayed

Here Is Why Uganda’s Dream Of Oil Export Will Be Delayed

Uganda’s dreams of exporting crude oil for the first time will be delayed by several years after the firms undertaking the exploration on its deposits, Tullow Oil Plc of Britain and Total South Africa, said the nation must improve its infrastructure to meet the transportation requirements.

The landlocked nation pulled out of a joint oil-pipeline project with Kenya in April, opting for Tanzania instead. The explorations firms said challenges in coordinating the pipeline project could further slow the plans by more than a decade since the black-gold was discovered in the Lake Albert basin.

“Everything being done in Uganda is for the first time ever, everything can be a risk. Timetables are prone to slipping, especially in frontier regions. All stakeholders would suffer from project delays,” said Will Hares, an analyst at Bloomberg’s research bureau in London.

The two nations plan to complete construction of the crude oil pipeline in 2020. The line is 1,443 kilometers long and will cost about $3.5 billion, Reuters reported.

Market delays, when global crude oil prices have dipped by about 45 percent since 2014, and the politically-fueled demand of production per day will also delay the plans further, Bloomberg reported.

Commercialization of oil production in East Africa’s second biggest economy have been held back by protracted delays in issuance of license.

The government only issued the first license to China National Offshore Oil Corporation (CNOOC) in 2013, nearly seven years after the discovery of the commercially viable oil deposits.

Tullow Oil and Total SA received their licenses, valid for 25 years with the option of a five-year renewal in August, Reuters reported.

The three firms jointly own rights to the Ugandan oil fields.

The nation has about 1.7 billion barrels of oil and will receive an estimated $43 billion in foreign income in the course of 25 years, much later after its neighbor, Kenya.

In comparison, Kenya, which discovered its oil deposits in 2012, has already undertaken speedy processes in efforts to commercialize its deposits and could start exporting it by 2018.

Tullow Oil, who discovered the Ngamia-1 well in Turkana County in 2011 and another field in South Lokichar Basin last year, said that it plans to start exports in March next year, Business Daily reported.

The two East African nations had hoped to start their oil exports by 2017.