Uganda and Tanzania set to make FID on EACOP Project Q1 2021

Uganda-Tanzania East Africa Crude Oil Pipeline (EACOP) project

By Ndubuisi Micheal Obinene

Uganda’s Minister for Energy & Mineral Development, Hon. Mary Goretti Kitutu, has formally announced that the Final Investment Decision for the East Africa Crude Oil Pipeline (EACOP) project will be made during the first quarter of 2021.

She made the announcement during her keynote address at the sixth edition of East Africa Oil & Gas Summit 2020 which was held virtually due to the COVID-19 pandemic. She noted that the year 2020 has been an enormous challenge following the global pandemic that has made a negative impact on the oil and gas industry.

She said, “Since activities are beginning to take shape, I am optimistic that by the first quarter of 2021, the FID will be made. We are working hard to achieve it. The East African Crudeoil Pipeline represents an investment of more $3.5 billion US dollars with many commercial opportunities for both domestic and regional players. This is by far the biggest bilateral trade agreement between Uganda and Tanzania.”

While speaking about the opportunities, she highlighted that the EACOP project offers Ugandan companies to take part in the project, noting that the government is opening up and working closely with the Ugandan Chamber of Mines and other industry associations to make sure local companies gets a fair share in terms of participating on the project.

According to her, the government has set aside an additional $20 billion financial instrument which will be used to support Ugandan companies in areas of oil and gas projects and the funds will be made available to the companies.

The Government of Uganda and Tanzania signed an agreement for the development of the East Africa Crude Oil Pipeline (EACOP) in May 2017 and the foundation stone for the pipeline was laid in August the same year. The project, however, could not proceed due to legal and environmental issues. Uganda and Tanzania signed a Host Government Agreement (HGA) to fast-track the pipeline development in September 2020.

The EACOP project is being developed by a joint venture between Total (66.7%) and CNOOC (33.3%). Total agreed to acquire Tullow’s 33.33% interest in the Ugandan oil assets as well as the oil export pipeline for a cash consideration of approximately £444 million ($575 million) in April 2020.

The East Africa Crude Oil Pipeline (EACOP) is a 1,443km pipeline to connect the oil fields around Lake Albert in Uganda to Tanzania’s export terminal in Tanga. Planned to supply up to 216 thousand barrels of crude oil a day from Uganda to Tanzania, it will be the first of its kind pipeline in East Africa and the longest electrically heated crude pipeline in the world.

The pipeline is intended to transport the crude output of two oil fields namely, Kingfisher and Tilenga that are being developed on the shores of Lake Albert by French oil company Total and China National Offshore Oil Corporation (CNOOC). These two fields are estimated to contain up to six billion barrels of recoverable oil resources.

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