Uganda, Total reach agreement bringing crude pipeline construction closer

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Uganda, Total reach agreement bringing crude pipeline construction closer

7:58 CAT | 12 Sep 2020

Photo: Twitter / @yoweri_k

Uganda and France’s Total have reached an agreement that will bring the oil firm and its partners closer to starting construction of a crude pipeline to neighbouring Tanzania, the company’s local unit said on Friday.

I welcome our partners from France, led by the .@Total CEO and Chairman, Patrick Pouyanne. I will get in touch with His Excellency .@MagufuliJP to follow up on Tanzania’s host agreement. pic.twitter.com/YOazNwjzcg

— Yoweri K Museveni (@yoweri_k) September 12, 2020

Uganda discovered crude oil reserves about 14 years ago but commercial production has been delayed partly because of a lack of infrastructure, such as an export pipeline.

The 1,445-km (900-mile) East African Crude Oil Pipeline, costing $3.5 billion, would pass through neighbouring Tanzania to the Indian Ocean port of Tanga.

Total said it had reached an agreement with Uganda protecting its rights and obligations in the pipeline’s construction and operation – known as the host government agreement.

“We have today reached major milestones which pave the way to the Final Investment Decision in the coming months,” Pierre Jessua, Managing Director of Total E&P Uganda, said in a statement.

“We now look forward to concluding a similar HGA (host government agreement) with the Government of Tanzania and to completing the tendering process for all major engineering, procurement and construction contracts.”

Total said a meeting between President Yoweri Museveni and its Chief Executive Officer Patrick Pouyanné also agreed to conditions allowing Uganda National Oil Company to join the project.

I welcome our partners from France, led by the .@Total CEO and Chairman, Patrick Pouyanne. I will get in touch with His Excellency .@MagufuliJP to follow up on Tanzania’s host agreement. pic.twitter.com/YOazNwjzcg

— Yoweri K Museveni (@yoweri_k) September 12, 2020

Total is the major shareholder in Uganda’s oil fields after agreeing in April to buy Tullow Oil’s entire stake in jointly-held onshore fields in Uganda for $575 million.

Uganda has an estimated 6 billion barrels of oil resources and plans to start pumping crude from the ground in 2023-24, according to government.

Total is now seeking to conclude a similar host government agreement with Tanzania, whose territory the pipe will traverse, to complete the tendering process for all engineering, procurement and construction contracts, according to the statement.

The French major is leading plans to build the conduit from Uganda’s oil fields in the west of the country to the Tanzanian port of Tanga along with partner Cnooc Ltd. of China and the two governments.

Source: Reuters / Bloomberg