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
PartnersTotalEnergies
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[edit]

As of March 2016, the oil pipeline was to 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 Port of Tanga,[10] a distance of approximately 1,410 kilometres (880 mi).[11]

Overview[edit]

As of 2015, Uganda had proven oil reserves exceeding 6.5 billion barrels, of which about 2.2 billion barrels were recoverable.[12] As of 2013, the country had planned to build a refinery in the Western Region to meet local and regional demand, and to export the rest via pipeline to the Indian Ocean coast.[13]

In 2013 Uganda had agreed to build a joint Uganda–Kenya Crude Oil Pipeline to the Kenyan port of Lamu.[14][15]

In 2015, 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 TotalEnergies.[16][17]

In April 2016, at the 13th Northern Corridor Heads of State Summit in Kampala, Uganda officially chose the Tanzania route for its crude oil, in preference to the Mombasa or Lamu routes in Kenya. The presidents of 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]

As of August 2017, the construction budget for the 1,445 kilometres (898 mi) pipeline was US$3.5 billion.[22][23] The pipeline was planned to have a capacity of 216,000 barrels of crude oil per day.[22] to be 24 inches (61 cm) in diameter, and Uganda was to 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 had been 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 was estimated at US$293 million, of which US$130 million had been paid in advance.[25]

Cost, funding, and timetable[edit]

As of March 2016, construction was planned to start in August 2016 and expected to last three years at a 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] In July 2016, following meetings between delegations led by the oil ministers of Tanzania and Uganda, held in Hoima, it was announced that construction of the 1,443 kilometres (897 mi) pipeline would begin in January 2017,[27] and completion was planned for 2020.[28]

In September 2020, TotalEnergies 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 was expected to lead to Final Investment Decision (FID), by the end of 2020.[29][30]

Two days later in September 2020, President Yoweri Museveni of Uganda and President John Pombe Magufuli of Tanzania signed an agreement in Chato, Tanzania, committing to jointly construct the 1,445 kilometres (898 mi) East 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, TotalEnergies and the Government of Tanzania signed a Host Government Agreement 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 was 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 TotalEnergies 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 which $2 billion were to be raised by the owners of the pipeline as equity investment and the remaining $3 billion were to be borrowed from external sources.[34]

Ownership[edit]

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

As of August 2017, negotiations and the search for international lenders were ongoing. Uganda and Tanzania were advised by Standard Bank of South Africa, while Total SA was advised by Sumitomo Mitsui Banking Corporation. The London-based firm law firm Clifford Chance was advising TotalEnergies on legal matters, while CNOOC was 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 TotalEnergies, for a consideration of US$575 million. Total was to assume 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

Final investment decision[edit]

On Tuesday, 1 February 2022, the President of Uganda Yoweri Museveni; the Vice President of Tanzania Philip Mpango; the Executive Chairman/CEO of TotalEnergies, Patrick Pouyanné; the president of CNOOC Uganda Limited, Chen Zhuobiao; Ugandan cabinet ministers, oil technocrats from Uganda and Tanzania and other invited guests gathered at Kololo in Kampala, to witness the signing of the final investment decision (FID), by TotalEnergies and CNOOC.[39]

Other related parties to the EACOP, who were represented at the FID signing included (a) Uganda National Oil Company (b) CNOOC Uganda Limited (c) Petroleum Authority of Uganda (d) TotalEnergies Uganda and (e) Tanzania Petroleum Development Corporation.[40]

Construction[edit]

The engineering, procurement and construction (EPC) contract was awarded to a joint venture comprising Worley Limited (formerly Worley Parsons Limited), from Australia and China Petroleum Pipeline Engineering. The construction is expected to commence in the first half of 2023 at an estimated budget cost of between US$3 billion and US$4 billion. Uganda's first oil is expected in 2025.[41]

Oil refinery[edit]

As of September 2013 an oil refinery was planned to be constructed in western Uganda to process the oil for use within the East African Community. The US$2.5 billion project was 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 to be distributed among the East African countries.[42](subscription required) In April 2016, Tanzania agreed to buy 8 percent of the shares in the refinery for US$150.4 million.[43]

Social and environmental impact[edit]

The project will "displace thousands of small farmers and put key wildlife habitat and coastal waters at risk."[8] As of 2020, civil society organizations have petitioned funding agencies not to support the project, citing potential social and environmental harm that the pipeline will cause.[9][44]

#StopEACOP is a campaign against the pipeline. Campaigners argue that, as the world's longest heated oil pipeline which will run through many populated areas, it will contribute to poor social outcomes for those displaced.[45] They also mention the significant risk to nature and biodiversity, as the pipeline runs through large areas of savannah, zones of high biodiversity value, mangroves, coastal waters, and protected areas, before arriving at the coast where an oil spill could be dire.[46] Spills are deemed more likely given the route through areas with seismic activity.[47] Critics of the project also point to the negative hydrological impact on the surface and groundwater resources of Lake Turkana and to the fact that the pipeline will add another major source of oil to global markets and thereby contribute to anthropogenic climate change.[48][49]

See also[edit]

References[edit]

  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. ^ The Economist (5 February 2022). "A big Ugandan oil project is progressing at last". The Economist. Retrieved 3 February 2022.
  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.{{cite web}}: 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. ^ Muhamadi Byemboijana (1 February 2022). "Oil & Gas: The Long Awaited FID Is Here". SoftPower. Kampala, Uganda. Retrieved 1 February 2022.
  40. ^ Joseph Kizza (1 February 2022). "As it happened: Final investment decision on oil announced". New Vision. Kampala, Uganda. Retrieved 1 February 2022.
  41. ^ Frederic Musisi (4 July 2022). "Oil pipeline firm applies for construction licence". Daily Monitor. Kampala, Uganda. Retrieved 4 July 2022.
  42. ^ 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.
  43. ^ 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.
  44. ^ "SA's Standard Bank Group Faces Protest Over Pipeline Funding Plan". Naija247news. 2020-06-24. Retrieved 2020-07-05.
  45. ^ "FOR PEOPLE. Stop the East African Crude Oil Pipeline". #StopEACOP. Retrieved 2022-05-31.
  46. ^ "HOME". #StopEACOP. Retrieved 2022-05-31.
  47. ^ "A Major Oil Pipeline Project Strikes Deep at the Heart of Africa". Yale E360. Retrieved 2022-05-31.
  48. ^ McKibben, Bill (20 September 2020). "With a New Pipeline in East Africa, an Oil Company Flouts France's Leadership on Climate". The New Yorker. Retrieved 31 May 2022.
  49. ^ "FOR NATURE | Stop the East African Crude Oil Pipeline". #StopEACOP. Retrieved 2022-05-31.

External links[edit]