Oil major Total interested in South Sudan-Uganda pipeline

The French oil giant Total has expressed interest in building a pipeline from South Sudan to Uganda that would continue to Kenya's coast, potentially alleviating the young state’s exportation headaches.

Total representative, Christophe de Margerie, reported that the company had proposed that the already planned Uganda-Kenya pipeline be extended to South Sudan.

"The pipe, which is supposed to be from our potential blocks, because they are not yet our blocks in Uganda, could be, effectively, a hub for different sources of crude," de Margerie told a press conference at the sidelines of the World Petroleum Congress.

"We say to Uganda, as part of our long-term view, you have to take into consideration what sort of oil can come from neighbour countries to make the pipe less expensive," he added.

Upon gaining independence, landlocked South Sudan took two-thirds of Sudan's 500 000 bpd of oil production, but it is now locked in a row with Khartoum over the use of the northern pipeline to the Red Sea.

To use the pipeline to Port Sudan, Khartoum has demanded a US$32/bbl. fee, which is more than 10 times typical industry levels, taking account of construction cost and distance.

To connect with the planned Uganda-Kenya pipeline would save costs for South Sudan, which has already talked to companies about building a pipeline directly to Kenya. According to analysts, it would be difficult for the country, which still suffers civil strife, to raise the funds required for a large pipeline project or overcome other logistical challenges.

Total, which already owns a potentially oil-rich licence in South Sudan, has agreed to buy into oil blocks in Uganda where London-based Tullow Oil has discovered recoverable reserves of 1.1 billion bbl.

De Margerie said there was no timeline for construction of the pipeline. "It's just thoughts today," he said, adding that Malaysia's Petronas and China's CNPC, which are currently operating in South Sudan, could also be interested in the project.

Read the article online at: https://www.worldpipelines.com/business-news/08122011/oil_major_total_interested_in_south_sudan-uganda_pipeline/