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Uganda, Tanzania sign pipeline deal to kick off oil production

Uganda, Tanzania and the two oil companies of Total E&P, and China’s CNOOC have finally signed the East African Crude Oil Pipeline deal to ensure oil production begins.

Uganda, Tanzania and the two oil companies of Total E&P, and China’s CNOOC have finally signed the East African Crude Oil Pipeline deal to ensure oil production begins.

The signing ceremony at State House, Entebbe was done by Energy minister Mary Goretti Kitutu on behalf of Uganda and whereas her Tanzanian counterpart did the job on the other side while the Total E&P vice president for Africa also appended signature.

Speaking after the signing ceremony, President Museveni said the pipeline deal can turn out to be key in the bigger development if the Democratic Republic of Congo and South Sudan choose to use it for their oil.

“At the maximum, it can carry 230,000 barrels per day. Besides, the same corridor, can take a return gas pipeline, supplying Tanzanian and Mozambique gas to Uganda and the Great Lakes region,” Museveni said.

He said chances are high for more oil to be discovered in the remaining 80% of the oil province in the Albertine graben in areas like Kibiro and Butyaba.

He said also cited the new hydro-carbon zone in the North East of the country in the Mount Kadam basin as another area for consideration of oil drilling in Uganda.

According to Museveni South Sudan and DRC also have oil that can be drilled, noting that the East Africa Oil Pipeline can be used together.

“This pipeline could turn out to be a very important project that may serve the region, not only in the short term but also in the medium, if not in the long-term,” he said.

“This project should, in addition to what we have said, serve to awaken all Africans that prosperity and strategic security, are only possible if we use the Pan-Africanist approach that gives us a bigger market and rationalizes economic linkages.”

The agreements

The deals signed on Sunday afternoon included the Tariff and Transportation Agreement (TTA) between the pipeline company and the shippers of the crude oil through the pipeline.

The two governments and oil firms also signed the Host Government Agreement for the Republic of Uganda and the shareholding Agreement (SHA) for shareholders to the EACOP Company.

Shareholders in the East African Oil Pipeline(EACOP) include

the Uganda National Oil Company (UNOC)on behalf of the Ugandan government, the Tanzania Petroleum Development Corporation (TPDC), Total E&P, and CNOOC.

With French company French Total E&P owning a majority stake of 72% in the pipeline, Uganda has 15% whereas CNOOC has 8% and Tanzania has 5%.

Pipeline

The East African Crude Oil Pipeline is a 1,445-kilometer-long pipeline from the oil wells in western Uganda in Hoima district to Tanzania’s seaport of Tanga.

The pipeline will cover 296km in Uganda passing through Hoima, Kyankwanzi, Mubende, Gomba, Kyotera, Lwengo, Ssembabule, Rakai, and Kikuube and 1443km in Tanzania through the regions of Kagera, Gieta, Shinyanga, Tabora, Singida, Dodoma, Manyara, and Tanga.

The $3.5 billion oil pipeline project is the longest electrically heated pipeline in the world and it is heated because Uganda’s oil is waxy.

Uganda has about 1.7 billion barrels of recoverable oil discovered in the Albertine Graben on the border between Uganda and DR Congo at the Kingfisher and Tilenga fields.

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