Africa: Government Eyes Major Oil Trading Hub in Tanga

Posted on :Monday , 22nd August 2016

The government is studying possibilities of constructing an oil trading hub in Tanga to supply fuel to East and Central Africa, adding to the region's blessings after it was chosen for the proposed Uganda crude oil export pipeline this year.

The Minister for Industry, Trade and Investments, Mr Charles Mwijage, said this week that the government had started working on an idea of an oil trading hub in Tanga as the region had great potential of becoming a major oil trading hub in East Africa due to its strategic geographical positioning with deep sea port, ample area for construction of big storage tanks and railway connection.

"Tanga should be an oil trading hub. The most ideal place in East African region is Tanga. We have big opportunity for oil trading," he said during inauguration of second kiln at Tanga Cement Company at Pongwe last Tuesday.

The minister said construction of an oil trading hub in Tanga would help to cut on freight charges for oil transportation from the source market as large crude carriers could anchor and filter oil products into other tankers in ship to ship (STS) transfer or to transfer storage tanks.

"We can create conducive environment for ship to ship (STS) transfer. The region has 25 metres draft deep.

There is enough area for construction of tanks for white products of up to 100,000 tonnes ... Tanga has no congestion of tanks and it has railway network," he said.

The envisaged facility would lower prices for oil products and hence attract market in the East and Central African region in DR Congo, Burundi and Rwanda as well as other neighbouring countries, he said.

The minister said construction of an oil trading hub would enable establishment of government bonded stock or floating stocks as strategic reserves which may influence price movement in favour of the country.

The government said last month that plans to complete construction of a crude oil pipeline from Uganda to Tanga in 2020 at an estimated cost of 3.5 billion US dollars.

Uganda has chosen Tanga to export its crude oil, rather than Lamu in Kenya after a report found the country was cheaper and more secure option than Kenya.

Its government said a pipeline between Kabaale in Hoima District and Tanga, of about 1,400km, will be the most cost-effective route when Uganda begins exporting oil by 2020.

Picking a route is vital for oil firms to make final investment decisions on developing reserves found in Uganda and Kenya, which are among a string of hydrocarbon finds on Africa's eastern seaboard.

Tanzania has found natural gas offshore. The government said three oil firms operating in Uganda - London-listed Tullow Oil, France's Total and China's CNOOC - have all agreed to participate in the construction of the pipeline, with building work scheduled to start in June 2017.

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