The East African Crude Oil Pipeline: High-Stakes Talks Between Uganda and Tanzania
The Minister of Energy and Mineral Development, Ruth Nankabirwa, has announced her upcoming meeting with Tanzania’s President Samia Suluhu Hassan to discuss the East African Crude Oil Pipeline (EACOP) project. This significant development is part of their agenda for the meeting.
Nankabirwa revealed this during a press conference at the Uganda Media Centre in Kampala, where she addressed the pressing matters related to the forthcoming Energy and Minerals Week 2023, scheduled for November 13-18.
The minister emphasized the critical nature of the project’s financial aspect, stating, “The shareholders have exhausted the equity almost, and so the debt is where we are grappling.” She expressed her intent to engage with President Hassan to outline Uganda’s perspective on the project while acknowledging the progress made in securing the pipeline’s route and compensating Project Affected Persons (PAPs).
EACOP’s financing structure comprises 60% debt and 40% equity, with an estimated debt of $2-3 billion (UGX 7.6-11.4 trillion), as disclosed in TotalEnergies shareholders meeting minutes for 2023.
As of September 27, 2023, Uganda was in the final stages of negotiations with two Chinese financiers, namely the Export-Import Bank of China and Sinosure, to provide financial support for the project after certain Western partners withdrew their involvement.
TotalEnergies holds a majority stake of 62% in the pipeline, with both Ugandan and Tanzanian state-owned oil companies having a 15% share each, and the China National Offshore Oil Corporation holding 8%.
The East African Crude Oil Pipeline forms part of a $10 billion (UGX 37.9 trillion) endeavor aimed at developing oilfields in Lake Albert, located in northwestern Uganda, and facilitating the export of crude oil to international markets via the Indian Ocean port of Tanga in Tanzania.
On October 25, 2023, Minister Nankabirwa informed Members of Parliament (MPs) that the Government was making significant progress to ensure the production of the first oil by the end of 2025. She emphasized the relentless efforts of the Government and its partners in this regard.
The minister disclosed that a total of 11 oil wells had already been drilled, with eight situated in the Tilenga area and three in the Kingfisher area. These wells possess the capacity to produce up to 190,000 barrels and 40,000 barrels of oil per day, respectively. The complete production process is projected to require 457 wells and 35 well pads.
In January 2023, President Yoweri Museveni launched the development and production wells at the Kingfisher field in Kikuube district, while those at the Tilenga Project, situated in the Albertine Graben within the Buliisa and Nwoya districts, commenced in June 2023.
The construction of central processing facilities at Kingfisher and Tilenga is well underway and adhering to the schedule for completion by 2025. The central processing facility for Tilenga, currently under construction, has reached 33% completion, while Kingfisher’s facility is at 12%, according to Nankabirwa.