Tullow, the company exploiting the reserves in Uganda, and also the company planning to move forward with the tapping of the new discoveries in Kenya, is pushing to build a new refinery and power plant in Hoima, and a new pipeline starting there and running via Lira, Moroto, the Turkana basin and on to Port Lamu.
South Sudan, Ethiopia and Kenya have already agreed to partner in the developments of the Lapsset Corridor project. This will see a new port be constructed in Lamu that is purpose built for the transportation of hydrocarbons, a new oil refinery, and also a new highway and railway line through Ethiopia.
The details of the new deal between Toyota and South Sudan are still vague but it is believed to be worth about $4 billion, and the expectation is that it will focus primarily on the construction of a new pipeline from the country’s oil fields to the Turkana basin, where it can link with the rest of the network being built to export oil via Kenya.
The only remaining sticking point is security – at present the various difficult security situations in that part of the African continent leave open the possibility of banditry. However, this is a problem that can be managed with a little planning. If a sufficient amount of the benefits from the construction of these export routes is seen by local populations, such as construction jobs, and revenues from the oil sales, then the improvements in the local economies will make it ever more important to the locals to keep the project going. It may require the deployment of extra peace-keeping forces in the short term, but in the long run the projects have the potential to be stabilising factors.
Winners and losers, and learning the hard way
If these projects go ahead, and it seems almost certain that they will in some form or other, there will be some distinct winners and losers. The most obvious winner is South Sudan, which will no-longer be reliant on an export route through an intransigent neighbour that is happy to use oil exports as a bargaining chip. It will have increased Foreign Direct Investment (FDI) in the country and can look forward to not only higher but also more assured revenues from its oil, and all the benefits that go along with that.
