“We are not competing with Uganda” says Kenyan oil leader

Summaya Athmani, head of Kenya’s National Oil Company, appeals for regional collaboration on oil infrastructure

Speakers at an East Africa Oil and Gas Summit in Nairobi yesterday urged the region’s governments to cooperate and harmonise their plans for processing and transport infrastructure.

“We are not competing with Uganda,” the Managing Director of Kenya’s National Oil Corporation, Summaya  Hassan Athmani, told delegates.  “The challenge is to expand our thinking beyond national boundaries and to think about this as a regional issue.”

With recent oil discoveries in Kenya and prospecting under way in Somalia and Ethiopia, Ms. Athmani said that the region could soon be producing upwards a of a million barrels of oil per day.

“This is our time as a continent,” she proclaimed-stressing, however, that “Our competitiveness as a region requires that we think wider than national interest.”

Coastal India, she pointed out, hosts oil refineries capable of processing 1.2 million barrels a day.  If East Africa’s oil infrastructure is developed in a piecemeal way, country by country and with small refineries dotted over the map, the region might price its products out of world markets.

With reference to Uganda’s refinery plans, Ms. Athmani noted that, because of the nature of the Albertine crude oil, the refinery would need to be highly sophisticated. “Will it be viable to build such a refinery with capacities that may be sub-optimal?” she asked.

“There needs to be a regional approach, ideally under the auspices of a regional model, with infrastructure jointly owned by East African governments,” Ms. Athmani urged.

Elly Karuhanga, President of Tullow Oil’s Ugandan subsidiary and Chair of the Uganda Chamber of Mines and Petroleum, was quick to agree on the need for regional cooperation.

“We need an immediate East African infrastructure conference” he told some 200 delegates from oil companies, oilfield service providers, and government agencies.

Mr. Karuhanga quoted a recent Reuters analysis as saying that East Africa may contain petroleum reserves worth US$ 9 trillion, but that investment totaling US$ 100 billion will be needed to bring the resources on stream.   The scale of investment requires regional coordination.

“A 2011 report by the World Bank makes a clear case that trade and investment, and therefore economic growth, have been constrained in East Africa by small, disconnected markets, high transportation costs and cumbersome regulatory barriers,” Mr. Karuhanga said.

“Oil is already altering the geopolitics of the region through the adjustment of trade flows and pattern of investment. Conflict may occur in the future as a consequence of oil produced, but in the long term collaborating policies are bound to work better for oil.”

oilinuganda