Kenya, Ethiopia ink pipeline deal

After the disappointment of losing out to Tanzania on a joint pipeline project with Uganda, Kenya appears to have found a new ally in Ethiopia.

The two governments have struck a deal to begin the construction of a joint oil pipeline in December 2016 linking the port of Lamu to Addis Ababa.

President Uhuru Kenyatta and Ethiopian Prime Minister Hailemariam Dessalegn on Thursday signed a memorandum of understanding in the cooperation on oil and gas sector among four other trade agreements.

In a joint communiqué sent by Foreign Affairs Cabinet Secretary Amina Mohammed, the two leaders committed to finalise an agreement on the development and operation of a product oil pipeline from Lamu Port to Addis Ababa by the end of 2016.

“We have agreed that we will be meeting at least twice a year to ensure the implementation of all these memoranda that we have signed. Our ministers will be meeting at least every quarter and the technical team will be meeting monthly to ensure that we actually deliver upon the commitments that we have made,” President Kenyatta said.

While in Brussels, Belgium, President Kenyatta expressed his disappointment with Uganda’s decision to use the Tanga route through Tanzania in the construction of their own oil pipeline.

“I thought and it was the Kenyan position that it might have been more economical if we were two of it together following the Northern route which is through the port of Lamu,” he said.

In April Uganda bailed on the joint opil pipeline deal with Kenya, after the Tanzanian government seemingly came in with a better offer. The Tanzanian government secured funding from French oil firm Total to have the Ugandan pipeline terminate at the port of Tanga.

Already Kenya has made plans to evacuate the first oil from the Lokichar basin in Turkana via road and rail to the port of Mombasa. The plan will see oil conveyed by road from Lokichar to Kapenguria then to Kitale from where it will be put on rail and transported to Mombasa with revenue from oil sales expected in 2017.

According to analysts, this is a move driven by permanent interest and will create good synergies for Kenya. As for Ethiopia, which is also a landlocked country, positioning itself strategically is of great importance and its partnership with Kenya on the oil pipeline is one way of them exploring their options.