At exactly 10 am on April 11, 2021, Samia Hassan Suluhu the Tanzanian president, arrived at Entebbe International Airport and later met her Ugandan counterpart to sign three important oil agreements.
The oil agreements which were signed by State House Entebbe included; the Host Government Agreement, Share Holder Agreement (for the pipeline company), and Tariff agreements, and these paved way for the construction of the East African Crude Oil Pipeline (EACOP).
The 1443km heated pipeline which will pass through ten districts in Uganda, will stretch from Hoima in Uganda up to Tanga in Tanzania.
It will transport Uganda’s oil to the coast, from where it will be exported to the international market.
The $3.55Bn pipeline will be the longest electrically heated pipeline in the world. It is heated because of the waxy nature of Uganda’s oil. Uganda has so far discovered over 6.5 billion barrels of oil.
“The project will bring revenues to the regional countries and more than 10,000 jobs will be created,” said the Tanzanian president after witnessing the signing.
President Museveni on his side said the pipeline will transport 230,000 barrels per day and therefore South Sudan and the Democratic Republic of the Congo could take advantage and use the facility.
“This pipeline could turn out to be a very important project that could serve the entire region in the long term. We could build a return pipeline to carry gas from Tanzania to Uganda and the entire region,” he said
However, as far as shareholding is concerned, JV partner Total Energies is the majority shareholder of the project, with 62%, followed by the Uganda National Oil Company (UNOC( and the Tanzanian Petroleum Development Company (TPDC) who both own 15% and the China National Offshore Oil Company (CNOOC) owning 8%.
This literally means that Total will contribute $2.2Bn, UNOC and TPDC contribute $532m each, and CNOOC $284m towards the construction of the $3.55Bn pipeline.
Total Energies is still the majority shareholder in the upstream, with 56.67%, followed by CNOOC with 8.33% and UNOC with 15%.
Backlash from EU
The EACOP project however this week faced a backlash when the EU Parliament adopted an urgent resolution denouncing the human rights violations as well as the major environmental and climate risks posed by the Tilenga and EACOP projects, developed by Total in Uganda and Tanzania.
Observers say the resolution could deter lenders from funding the oil project which is expected to attract billions of dollars into the economy and create over 300,000 jobs.
The EU legislators also asked to “put an end to the extractive activities in protected and sensitive ecosystems, including the shores of Lake Albert”, referring to the 132 wells that Total plans to dig into the Murchison Falls National Park, a protected area, and to the numerous protected ecosystems which the 50°C heated EACOP pipeline will cross.
Quoting the International Energy Agency’s 2021 report, they also recall that to have a chance to limit global warming to 1,5°C, no new oil extraction project should be developed.
Tayebwa, Museveni Respond
A day after Deputy Speaker Thomas Tayebwa bashed the EU over its racist movement, president Museveni came up and assured Ugandans that the oil will come with or without Total’s involvement.
“We should remember that Total Energies convinced me about the Pipeline idea,” Museveni tweeted on Friday night.
“If they choose to listen to the EU Parliament, we shall find someone else to work with,” he added
Tayebwa condemned the resolution by the European Parliament, describing the EU decision as uninformed and based on hearsay.
“The propaganda largely targets the 1445-kilometer East African Crude Oil Pipeline, which will run for 296 kilometers in Uganda. The EACOP represents less than 0.1% of the operational global pipeline network of 1.18million Kilometres,” said Tayebwa.
“It is imprudent to say that Uganda’s oil projects will exacerbate climate change, yet it is a fact that the EU block with only 10% of the world’s population is responsible for 25% of global emissions, and Africa with 20% of the world’s population is responsible for 3% of emissions. The EU and other western countries are historically responsible for climate change. Who then should stop or slow down on development of natural resources? Certainly not Africa or Uganda,” he wondered.
Tayebwa said over 70% of the persons affected by land acquisition for the projects have been compensated or resettled and are undergoing livelihood improvement projects in agriculture, financial literacy, and vocational skills, among others.
Total Energies SE, a giant oil and gas multinational, represents the interests of the French government.
Total Energies EP as a subsidiary of the French giant is developing oil fields in Nwoya and Buliisa Districts while another subsidiary; Total Holdings International B.V holds a 62 percent share in the EACOP holding company.
Museveni said that “I want to assure you that the project shall proceed as stipulated in the contract we have with TotalEnergies and CNOOC.”
Museveni said, “either way, we shall have our oil coming out by 2025 as planned. So, the people of Uganda should not worry,”
FID Commitment
DaParrot understands that joint venture partners on February 11, announced the Final Investment Decision (FID), where they committed to investing between $15Bn and $20Bn in Uganda’s oil in the next 3 to 5 years.
The $15Bn investment includes among others; the $3.55Bn in EACOP, $4Bn in Tilenga Development Area, $1.6Bn in Kingfisher Development Area, and the Kabaale Airport.
If Total Energies withdraw, it literally indicates that Uganda will have to look for another oil investor who will pump close to $10Bn into the sector.
Patrick Pouyanne, the CEO and Chairman of TotalEnergies who led the Joint Venture Partners (JVPs) in announcing the FID commitment and said that the development of Lake Albert resources, “is a masterpiece of a project and will be achieved at low cost and with a low carbon footprint,”
CNOOC president said that they will invest $1.6Bn in Kingfisher where $400m will go to local communities.
CNOOC this week announced that its first oil rig had arrived in Mombasa, awaiting shipping to Uganda.
About the Projects
The Lake Albert development comprises the Tilenga and Kingfisher upstream oil projects in Uganda and the construction of the East African Crude Oil Pipeline (EACOP) in Uganda and Tanzania. The Tilenga project, operated by TotalEnergies, and the Kingfisher project, operated by CNOOC, are expected to start producing in 2025 and reach a cumulative plateau production of 230,000 Barrels per Day.
Production from the Uganda oil fields will be transported to the port of Tanga in Tanzania on the Indian Ocean through the EACOP cross-border pipeline,
Uganda’s crude is medium-light 30 °API, low in sulfur but very waxy, with a pour point of 40°C, making it solid at surface temperature.
The EACOP website notes that “due to the viscous and waxy nature of Uganda’s crude oil, the pipeline will need to be heated along the entire route, making the EACOP the longest electrically heated pipeline in the world.”
