Visiting Kenyan President Uhuru Kenyatta signed the deal with Ugandan President Yoweri Museveni on the sidelines of a meeting in Kampala for the East African Community trading bloc.
A memorandum of understanding published Wednesday by The (Kenyan) Daily Monitor said the deal includes work on the reversal of an existing pipeline to service Ugandan markets.
"Another pipeline will be constructed and will be for evacuation of crude oil when it starts flowing and this again will be done between Uganda, South Sudan and Kenya, ending up at the port of Lamu," the memorandum said.
Energy companies are working to extract oil from Uganda's lucrative Lake Albert region. Kenya, meanwhile, serves as an important transit hub for its landlocked neighbors like South Sudan, which relies on the Sudanese government for oil transit.
The report gave no indication of the volume of oil planned for the pipelines. It said Uganda would lead the development in associated refineries while Kenya would oversee the construction of the pipeline.