East African Crude Oil Pipeline

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

Location

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, a distance of approximately .

Overview

As of 2015, Uganda had proven oil reserves exceeding 6.5 billion barrels, of which about 2.2 billion barrels were recoverable. 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.

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

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.

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. 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.

As of August 2017, the construction budget for the pipeline was US$3.5 billion. The pipeline was planned to have a capacity of 216,000 barrels of crude oil per day. to be in diameter, and Uganda was to pay Tanzania US$12.20 for every barrel flowing through the pipeline.

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.

Cost, funding, and timetable

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. 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. 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 pipeline would begin in January 2017, and completion was planned for 2020.

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.

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 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. Once started, construction of the pipeline is expected to last about 36 months.

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.

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. Construction is now slated to begin in July 2021, with first oil anticipated in 2025.

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.

Ownership

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

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.

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 all tax liabilities related to the transaction. As of April 2020, the ownership of the pipeline was as represented in the table below. That ownership changed in April 2021, at the signing of the definitive investment agreements.

Final investment decision

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.

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.

Construction

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.

Pipeline insurance

In August 2022, Ugandan online media reported that licensing, registration and shareholding paperwork had been submitted, received and approved by the Insurance Regulatory Authority of Uganda for the Insurance Consortium for Oil and Gas Uganda (ICOGU) to insure the EACOP.

Oil refinery

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. In April 2016, Tanzania agreed to buy 8 percent of the shares in the refinery for US$150.4 million.

Social and environmental impact

The project will "displace thousands of small farmers and put key wildlife habitat and coastal waters at risk." 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.

#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. 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. Spills are deemed more likely given the route through areas with seismic activity. 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.

See also

* Petroleum Authority of Uganda
* Kenya–Uganda–Rwanda Petroleum Products Pipeline
* Hoima–Kampala Petroleum Products Pipeline
* Tanzania-Uganda Natural Gas Pipeline

References

External links

Official Website

Design of EACOP integrates adequate environmental protection, safety measures
As of 15 July 2022.

East African Crude Oil Pipeline
at the Global Energy Monitor.
Pipeline dreams: Inside the Uganda–Tanzania oil pipeline talks
As of 18 March 2019.


* ttps://www.monitor.co.ug/News/National/Uganda--Tanzania-discuss-oil-pipeline/-/688334/3278722/-/12v4182z/-/index.html Uganda, Tanzania discuss oil pipeline

{{DEFAULTSORT:East African Crude Oil Pipeline
Proposed energy infrastructure in Africa
Oil pipelines in Tanzania
Oil pipelines in Uganda
Petroleum infrastructure in Tanzania
Petroleum infrastructure in Uganda
Tanzania–Uganda relations