East African Crude Oil Pipeline

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East African Crude Oil Pipeline
Uganda-Tanzania Proposed Pipeline.jpg
Map of East African Crude Oil Pipeline
Location
CountryUganda & Tanzania
Coordinates01°15′54″S 31°40′33″E / 1.26500°S 31.67583°E / -1.26500; 31.67583
General directionWest to East
FromHoima, Uganda
Passes throughBukoba, Tanzania
ToTanga, Tanzania
General information
TypeOil pipeline
PartnersTotal SA
Commissioned2025 (Expected)[1][2]
Technical information
Length897 mi (1,444 km)

The East African Crude Oil Pipeline (EACOP), also known as the Uganda–Tanzania Crude Oil Pipeline (UTCOP),[3][4] is under construction[5] and intended to transport crude oil from Uganda's oil fields to the Port of Tanga, Tanzania on the Indian Ocean.[6] Once completed, the pipeline will be the longest heated crude oil pipeline in the world.[7] Because of the large scale displacement of communities and wildlife, global environmental groups are protesting its construction and finance.[8][9]

Location[]

The oil pipeline will start in Buseruka sub-county, Hoima District, in Uganda's Western Region. It will travel in a general south-easterly direction to pass through Rakai District in Uganda, Bukoba in Tanzania, loop around the southern shores of Lake Victoria, continue through Shinyanga and Singida, to end in Tanga,[10] a distance of approximately 1,410 kilometres (880 mi).[11]

Overview[]

Uganda has proven oil reserves exceeding 6.5 billion barrels, of which about 2.2 billion barrels are recoverable.[12] The country plans to build a refinery in the Western Region to meet local and regional demand, with the rest exported via pipeline to the Indian Ocean coast.[13]

Uganda previously agreed to build a joint Uganda–Kenya Crude Oil Pipeline to the Kenyan port of Lamu.[14][15]

Concerns regarding security and cost, however, motivated parallel negotiations with Tanzania regarding a shorter and safer route to Port Tanga, with the support of the French petroleum conglomerate Total SA.[16][17]

At the 13th Northern Corridor Heads of State Summit in Kampala in April 2016, Uganda officially chose the Tanzania route for its crude oil, in preference to the Mombasa or Lamu routes in Kenya. The presidents of both Kenya and Rwanda were present, along with representatives from Ethiopia, South Sudan, and Tanzania.[18][19] At the same summit, President Uhuru Kenyatta announced that Kenya would build the Kenya Crude Oil Pipeline on its own, thereby abandoning the Uganda–Kenya Crude Oil Pipeline.[20][21]

The construction budget for the 1,445 kilometres (898 mi) pipeline is US$3.5 billion.[22][23] The pipeline is planned to have a capacity of 216,000 barrels of crude oil per day.[22] It will be 24 inches (61 cm) in diameter, and Uganda will pay Tanzania US$12.20 for every barrel flowing through the pipeline.[24]

In December 2021, the Ugandan parliament passed the East African Crude Oil Pipeline Special Provisions Bill into Ugandan law. A similar law was passed by the Parliament of Tanzania, in August 2021. The new act of parliament governs the county's participation in the estimated US$3.5 billion EACOP construction, operations and maintenance. Uganda's contribution is estimated at US$293 million, of which US$130 million has been paid in advance.[25]

Cost, funding, and timetable[]

Construction originally was planned to start in August 2016 and last three years at a budgeted cost of US$4 billion, providing approximately 15,000 construction jobs and 1,000 to 2,000 permanent jobs.[26] In March 2016, the Daily Monitor newspaper reported that Total E&P was prepared to spend US$4 billion (UGX:13 trillion) to fund construction of this pipeline.[11] Following meetings between delegations led by the oil ministers of Tanzania and Uganda, held in Hoima in July 2016, it was announced that construction of the 1,443 kilometres (897 mi) pipeline would begin in January 2017.[27] Completion was planned for 2020.[28]

On 11 September 2020, Total SA and the government of Uganda signed the Host Government Agreement (HGA) for the East Africa Crude Oil Pipeline (EACOP) project, at State House Entebbe. This is expected to lead to Final Investment Decision (FID), by the end of 2020.[29][30]

Two days later, President Yoweri Museveni of Uganda and President John Pombe Magufuli of Tanzania signed an agreement in Chato, committing to jointly construct the 1,445 kilometres (898 mi) Est Africa Crude Oil Pipeline, at an estimated cost of US$3.5 billion. Work on the pipeline is scheduled to start by the end of 2020.[31] Once started, construction of the pipeline is expected to last about 36 months.[30]

On 27 October 2020, Total SA and the Government of Tanzania signed an HGA that will govern the dealings of the two entities regarding the EACOP, 70 percent of which will pass through Tanzanian territory. Laying of the pipeline is anticipated to begin during the first quarter of 2021.[32]

On 11 April 2021, presidents Yoweri Museveni of Uganda and Samia Suluhu of Tanzania met in Entebbe, Uganda with Patrick Pouyanné, the Chairman/CEO of Total SA and Chen Zhuoubiao, President of CNOOC Uganda along with Ugandan and Tanzanian technocrats, lawyers and government ministers, to sign a number of agreements, allowing the beginning of construction of the EACOP.[33] Construction is now slated to begin in July 2021, with first oil anticipated in 2025.[1]

In August 2021, the total project cost was reported as US$5 billion. Of the total, $2 billion will be raised by the owners of the pipeline as equity investment. The remaining $3 billion will be borrowed from external sources.[34]

Ownership[]

As of August 2017, the list of potential equity partners included several stakeholders as outlined in the table below:[35]

Negotiations and the search for international lenders are ongoing. Uganda and Tanzania are being advised by Standard Bank of South Africa, while Total SA is being advised by Sumitomo Mitsui Banking Corporation. The London-based firm law firm Clifford Chance is advising Total SA on legal matters, while CNOOC is advised by the Imperial Bank of China.[35]

In April 2020, Tullow Oil Plc sold its "entire interests in Uganda's Lake Albert development project, including the East African Crude Oil Pipeline", to Total S.A., for a consideration of US$575 million. Total will assume all tax liabilities related to the transaction.[36] As of April 2020, the ownership of the pipeline was as represented in the table below.[37] That ownership changed in April 2021, at the signing of the definitive investment agreements.[38]

East African Crude Oil Pipeline Stock Ownership
Rank Name of Owner Ownership in 2020 (%) Ownership in 2021 (%) Notes
1 TotalEnergies
45.0
62.0
 [38]
2 China National Offshore Oil Corporation
35.0
8.0
 [38]
3 Uganda National Pipeline Company
15.0
15.0
 [38]
4 Tanzania Petroleum Development Corporation
5.0
15.0
 [38]
Total
100.00
100.00

Oil refinery[]

Main article: Uganda Oil Refinery

An oil refinery is planned to be constructed in western Uganda to process the oil for use within the East African Community. The US$2.5 billion project is to be developed under a public-private partnership, with 50 percent of the project owned by a private developer and 10 percent owned by Jk Minerals Africa of South Africa. The remaining 40 percent will be distributed among the East African countries.[39] On 30 April 2016, Tanzania agreed to buy 8 percent of the shares in the refinery for US$150.4 million.[40]

Social and environmental impact[]

Project will "displace thousands of small farmers and put key wildlife habitat and coastal waters at risk."[8] Civil society organizations have petitioned funding agencies to not support the project, citing potential social and environmental harm that the pipeline will cause.[9][41]

See also[]

References[]

  1. ^ a b Daily Monitor (12 April 2021). "Uganda's first oil production now set for early 2025" (The Citizen Tanzania Quoting Daily Monitor). The Citizen (Tanzania). Dar es Salaam. Retrieved 12 April 2021.
  2. ^ Nicholas Bariyo (12 April 2021). "Total Expects First Oil From Ugandan Project in 2025". Annecy, France: Market Screener. Retrieved 12 April 2021.
  3. ^ Editorial (9 August 2017). "Getting crude oil pipeline off ground is great leap". Daily Monitor. Kampala. Retrieved 9 August 2017.
  4. ^ Halima Abdallah (5 September 2017). "Uganda seeks more land for oil pipeline". The EastAfrican. Nairobi. Retrieved 5 September 2017.
  5. ^ The EastAfrican (5 August 2017). "Magufuli, Museveni lay foundation stone for crude oil pipeline". The EastAfrican. Nairobi. Retrieved 5 August 2017.
  6. ^ Elias Biryabarema, and Fumbuka Ng'wanakilala (2 March 2016). "Uganda, Tanzania plan oil pipeline". Reuters.com. Retrieved 3 March 2016.
  7. ^ Gbenga, Ajifowoke Michael (2020-07-03). "World Bank approves $55 million IDA grant for Somalia". Ventures Africa. Retrieved 2020-07-05.
  8. ^ a b Pearce, Fred (May 21, 2020). "A Major Oil Pipeline Project Strikes Deep at the Heart of Africa". Yale E360. Retrieved 2020-07-05.
  9. ^ a b Karashani, Bob (April 11, 2020). "AfDB says no plans to fund Uganda-Tanzania pipeline". The East African. Retrieved 2020-07-05.
  10. ^ Musisi, Frederic (7 March 2016). "Oil pipeline: Which way for Uganda?". Daily Monitor. Kampala. Retrieved 7 March 2016.
  11. ^ a b Musisi, Frederic (16 March 2016). "Total readies UShs13 trillion for oil pipeline development". Daily Monitor. Kampala. Retrieved 16 March 2016.
  12. ^ Patey, Luke (October 2015). "Oil in Uganda: Hard bargaining and complex politics in East Africa" (PDF). Oxford: Oxford Institute for Energy Studies. Retrieved 28 April 2016.
  13. ^ Ouga, Samuel (14 August 2013). "Uganda's Oil Refinery – An Opportunity for transformation". New Vision. Kampala. Retrieved 3 March 2016.
  14. ^ Biryabarema, Elias (25 June 2013). "Uganda agrees to plan for oil pipeline to new Kenya port". Reuters.com. Retrieved 28 April 2016.
  15. ^ Bariyo, Nicholas (25 June 2013). "Uganda, Kenya Agree to Construct Crude export Pipeline to Port Lamu". Wall Street Journal Quoting Dow Jones Newswires. New York City. Archived from the original on 6 July 2013. Retrieved 28 April 2016.CS1 maint: unfit URL (link)
  16. ^ Allan Olingo, and James Anyanzwa (17 October 2015). "Regional power play in tussle over new route of Uganda oil pipeline". The EastAfrican. Nairobi. Retrieved 3 March 2016.
  17. ^ Abdalah, Halima (13 September 2015). "Oil firms prefer Tanga pipeline route to Lamu". The EastAfrican. Nairobi. Retrieved 3 March 2016.
  18. ^ Musisi, Frederic (23 April 2016). "Uganda chooses Tanga route for oil pipeline". Daily Monitor. Kampala. Retrieved 23 April 2016.
  19. ^ Musisi, Frederick (26 April 2016). "Transporting oil to Tanzania to cost Shs40,000 per barrel". Daily Monitor. Kampala. Retrieved 26 April 2016.
  20. ^ PSCU (23 April 2016). "Kenya will build own pipeline, Uhuru tells EAC summit". Daily Nation. Nairobi. Retrieved 26 April 2016.
  21. ^ Ligami, Christabel (16 April 2016). "As Uganda chooses Tanzania pipeline route, Kenya to go it alone". African Review. Nairobi. Retrieved 26 April 2016.
  22. ^ a b The Independent Uganda (6 August 2017). "Uganda: Museveni, Magufuli Lay Foundation Stone for Oil Pipeline". The Independent (Uganda) via AllAfrica.com. Kampala. Retrieved 8 August 2017.
  23. ^ Kidanka, Christopher (6 August 2017). "Tanzania ready to take up pipeline contracts". The EastAfrican. Nairobi. Retrieved 6 August 2017.
  24. ^ Barigaba, Julius (6 March 2017). "Museveni's visit to Dar rescues oil pipeline deal, sets project timelines". The EastAfrican. Nairobi. Retrieved 6 August 2017.
  25. ^ Johnathan Kamoga (10 December 2021). "Ugandan Parliament Passes EACOP Law". The EastAfrican. Nairobi, Kenya. Retrieved 10 December 2021.
  26. ^ Mwakyusa, Alvar (8 March 2016). "East Africa: Construction of Uganda - Tanga Port Oil Pipeline Starts August". Tanzania Daily News via AllAfrica.com. Dar es Salaam. Retrieved 8 March 2016.
  27. ^ Mugerwa, Francis (8 July 2016). "Building of Hoima-Tanzania oil pipeline will start in January". The EastAfrican. Nairobi. Retrieved 12 July 2016.
  28. ^ "Tanzania aims to complete oil pipeline from Uganda in 2020". The East African Quoting Reuters. Reuters. 3 August 2016. Retrieved 3 August 2016.
  29. ^ New Vision (11 September 2020). "Uganda, Total sign key oil pipeline agreement". New Vision. Kampala. Retrieved 13 September 2020.
  30. ^ a b "Uganda, Total reach agreement bringing crude pipeline construction closer". Mumbai: The Economic Times. Reuters. 12 September 2020. Retrieved 11 October 2020.
  31. ^ Agence France-Presse (14 September 2020). "Magufuli, Museveni sign deal on $3.5bn crude pipeline". The EastAfrican. Nairobi. Retrieved 30 October 2020.
  32. ^ Zephania Ubwani (27 October 2020). "Tanzania, Total sign agreement for East African Crude Oil Pipeline". The Citizen (Tanzania). Dar es Salaam. Retrieved 31 October 2020.
  33. ^ Frederic Musisi (11 April 2021). "New Dawn As Govt, Oil Firms Seal Deal To Kick Off Production". Daily Monitor. Kampala. Retrieved 12 April 2021.
  34. ^ Julius Barigaba (21 August 2021). "Cost of Hoima-Tanga pipeline hits $5b as risk averse banks walk away from project". The EastAfrican. Nairobi, Kenya. Retrieved 22 August 2021.
  35. ^ a b Musisi, Frederic (16 August 2017). "Uganda, TZ target 'flexible' European pipeline funding". Daily Monitor. Kampala. Retrieved 16 August 2017.
  36. ^ Daily Monitor (23 April 2020). "Total To Acquire Tullow Interests In Uganda At $575 Million". Daily Monitor. Kampala. Retrieved 24 April 2020.
  37. ^ Halima Abdallah (14 March 2019). "Uganda oil pipeline to wait for a while". The EastAfrican. Nairobi. Retrieved 18 March 2019.
  38. ^ a b c d e Julius Barigaba (3 May 2021). "EACOP's Financing Blues As Lenders Desert $3.5B Project". The EastAfrican. Nairobi. Retrieved 3 May 2021.
  39. ^ Kasita, Ibrahim (19 September 2013). "East Africa: EAC States to Invest 40 Percent in Oil Refinery". New Vision via AllAfrica.com. Kampala. Retrieved 3 August 2016.
  40. ^ Ludger Kasumuni (30 April 2016). "TZ to spend Sh300bn on buying stake in Uganda refinery". The Citizen (Tanzania). Dar Es Salaam. Retrieved 3 August 2016.
  41. ^ "SA's Standard Bank Group Faces Protest Over Pipeline Funding Plan". Naija247news. 2020-06-24. Retrieved 2020-07-05.

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