Uganda–Tanzania Crude Oil Pipeline

The Uganda–Tanzania Crude Oil Pipeline (UTCOP), also known as the East African Crude Oil Pipeline (EACOP),[3][4] is under construction[5] and intended to transport crude oil from Uganda's oil fields to the Port of Tanga, Tanzania on the Indian Ocean.[6] Once completed, the pipepline will be the longest heated crude oil pipeline in the world.[7]

Uganda–Tanzania Crude Oil Pipeline
Map of Uganda–Tanzania Crude Oil Pipeline
Location
CountryUganda & Tanzania
Coordinates01°15′54″S 31°40′33″E
General directionWest to East
FromHoima, Uganda
Passes throughBukoba, Tanzania
ToTanga, Tanzania
General information
TypeOil pipeline
PartnersTotal SA
Commissioned2020 (Expected)[1][2]
Technical information
Length897 mi (1,444 km)

Location

The oil pipeline will start in Buseruka sub-county, Hoima District, in Uganda's Western Region. It will travel in a general south-easterly direction to pass through Masaka in Uganda, Bukoba in Tanzania, loop around the southern shores of Lake Victoria, continue through Shinyanga and Singida, to end in Tanga,[8] a distance of approximately 1,410 kilometres (880 mi).[9]

Background

Uganda has proven oil reserves exceeding 6.5 billion barrels, of which about 2.2 billion barrels are recoverable.[10] The country plans to build a refinery in the Western Region to meet local and regional demand, with the rest exported via pipeline to the Indian Ocean coast.[11]

Uganda previously agreed to build a joint Uganda–Kenya Crude Oil Pipeline to the Kenyan port of Lamu.[12][13]

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 Total SA.[14][15]

At the 13th Northern Corridor Heads of State Summit in Kampala in April 2016, Uganda officially chose the Tanzania route for its crude oil, in preference to the Mombasa or Lamu routes in Kenya. The presidents of both Kenya and Rwanda were present, along with representatives from Ethiopia, South Sudan, and Tanzania.[16][17] 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.[18][19]

The construction budget for the 1,445 kilometres (898 mi) pipeline is US$3.5 billion.[20][21] The pipeline is planned to have a capacity of 216,000 barrels of crude oil per day.[20] It will be 24 inches (61 cm) in diameter, and Uganda will pay Tanzania US$12.20 for every barrel flowing through the pipeline.[22]

Cost, funding, and timetable

Construction originally was planned to start in August 2016 and last three years at a budgeted cost of US$4 billion, providing approximately 15,000 construction jobs and 1,000 to 2,000 permanent jobs.[23] 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.[9] Following meetings between delegations led by the oil ministers of Tanzania and Uganda, held in Hoima in July 2016, it was announced that construction of the 1,443 kilometres (897 mi) pipeline would begin in January 2017.[24] Completion is planned for 2020.[25]

Ownership

As of August 2017, the list of potential equity partners included several stakeholders as outlined in the table below:[26]

Negotiations and the search for international lenders are ongoing. Uganda and Tanzania are being advised by Standard Bank of South Africa, while Total SA is being advised by Sumitomo Mitsui Banking Corporation. The London-based firm law firm Clifford Chance is advising Total SA on legal matters, while CNOOC is advised by the Imperial Bank of China.[26]

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 Total S.A., for a consideration of US$575 million. Total will assume all tax liabilities related to the transaction.[27] As of April 2020, the ownership of the pipeline was as represented in the table below.[28]

East African Crude Oil Pipeline Stock Ownership
RankName of OwnerPercentage Ownership
1Total SA
45.0
2China National Offshore Oil Corporation
35.0
3Uganda National Pipeline Company
15.0
4Tanzania Petroleum Development Corporation
5.0
Total
100.00

Oil refinery
Main article: Uganda Oil Refinery

An oil refinery is planned to be constructed in western Uganda to process the oil for use within the East African Community. The US$2.5 billion project is 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 will be distributed among the East African countries.[29] On 30 April 2016, Tanzania agreed to buy 8 percent of the shares in the refinery for US$150.4 million.[30]

Social and environmental impact

Project will allegedly "displace thousands of small farmers and put key wildlife habitat and coastal waters at risk."[31] Civil society organizations have petitioned funding agencies to not support the project, citing potential social and environmental harm that the pipeline will cause.[32][33]

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See also

References
  1. AP (26 April 2016). "Uganda: Hope for oil production by 2018 after pipeline deal". Associated Press. Retrieved 27 April 2016.
  2. Muhumuza, Rodney (26 April 2016). "Uganda: Agreement to build oil pipeline through Tanzania boosts hopes for production of crude by 2018". US News Quoting Associated Press. New York City. Retrieved 27 April 2016.
  3. Editorial (9 August 2017). "Getting crude oil pipeline off ground is great leap". Daily Monitor. Kampala. Retrieved 9 August 2017.
  4. Abdallah, Halima (5 September 2017). "Uganda seeks more land for oil pipeline". The EastAfrican. Nairobi. Retrieved 5 September 2017.
  5. The EastAfrican (5 August 2017). "Magufuli, Museveni lay foundation stone for crude oil pipeline". The EastAfrican. Nairobi. Retrieved 5 August 2017.
  6. Elias Biryabarema, and Fumbuka Ng'wanakilala (2 March 2016). "Uganda, Tanzania plan oil pipeline". Reuters.com. Retrieved 3 March 2016.
  7. Gbenga, Ajifowoke Michael (2020-07-03). "World Bank approves $55 million IDA grant for Somalia". Ventures Africa. Retrieved 2020-07-05.
  8. Musisi, Frederic (7 March 2016). "Oil pipeline: Which way for Uganda?". Daily Monitor. Kampala. Retrieved 7 March 2016.
  9. Musisi, Frederic (16 March 2016). "Total readies UShs13 trillion for oil pipeline development". Daily Monitor. Kampala. Retrieved 16 March 2016.
  10. Patey, Luke (October 2015). "Oil in Uganda: Hard bargaining and complex politics in East Africa" (PDF). Oxford: Oxford Institute for Energy Studies. Retrieved 28 April 2016.
  11. Ouga, Samuel (14 August 2013). "Uganda's Oil Refinery – An Opportunity for transformation". New Vision. Kampala. Retrieved 3 March 2016.
  12. Biryabarema, Elias (25 June 2013). "Uganda agrees to plan for oil pipeline to new Kenya port". Reuters.com. Retrieved 28 April 2016.
  13. Bariyo, Nicholas (25 June 2013). "Uganda, Kenya Agree to Construct Crude export Pipeline to Port Lamu". Wall Street Journal Quoting Dow Jones Newswires. New York City. Archived from the original on 6 July 2013. Retrieved 28 April 2016.CS1 maint: unfit url (link)
  14. Allan Olingo, and James Anyanzwa (17 October 2015). "Regional power play in tussle over new route of Uganda oil pipeline". The EastAfrican. Nairobi. Retrieved 3 March 2016.
  15. Abdalah, Halima (13 September 2015). "Oil firms prefer Tanga pipeline route to Lamu". The EastAfrican. Nairobi. Retrieved 3 March 2016.
  16. Musisi, Frederic (23 April 2016). "Uganda chooses Tanga route for oil pipeline". Daily Monitor. Kampala. Retrieved 23 April 2016.
  17. Musisi, Frederick (26 April 2016). "Transporting oil to Tanzania to cost Shs40,000 per barrel". Daily Monitor. Kampala. Retrieved 26 April 2016.
  18. PSCU (23 April 2016). "Kenya will build own pipeline, Uhuru tells EAC summit". Daily Nation. Nairobi. Retrieved 26 April 2016.
  19. Ligami, Christabel (16 April 2016). "As Uganda chooses Tanzania pipeline route, Kenya to go it alone". African Review. Nairobi. Retrieved 26 April 2016.
  20. The Independent Uganda (6 August 2017). "Uganda: Museveni, Magufuli Lay Foundation Stone for Oil Pipeline". The Independent (Uganda) via AllAfrica.com. Kampala. Retrieved 8 August 2017.
  21. Kidanka, Christopher (6 August 2017). "Tanzania ready to take up pipeline contracts". The EastAfrican. Nairobi. Retrieved 6 August 2017.
  22. Barigaba, Julius (6 March 2017). "Museveni's visit to Dar rescues oil pipeline deal, sets project timelines". The EastAfrican. Nairobi. Retrieved 6 August 2017.
  23. Mwakyusa, Alvar (8 March 2016). "East Africa: Construction of Uganda - Tanga Port Oil Pipeline Starts August". Tanzania Daily News via AllAfrica.com. Dar es Salaam. Retrieved 8 March 2016.
  24. Mugerwa, Francis (8 July 2016). "Building of Hoima-Tanzania oil pipeline will start in January". The EastAfrican. Nairobi. Retrieved 12 July 2016.
  25. Reuters (3 August 2016). "Tanzania aims to complete oil pipeline from Uganda in 2020". The East African Quoting Reuters. Retrieved 3 August 2016.
  26. Musisi, Frederic (16 August 2017). "Uganda, TZ target 'flexible' European pipeline funding". Daily Monitor. Kampala. Retrieved 16 August 2017.
  27. Daily Monitor (23 April 2020). "Total To Acquire Tullow Interests In Uganda At $575 Million". Daily Monitor. Kampala. Retrieved 24 April 2020.
  28. Halima Abdallah (14 March 2019). "Uganda oil pipeline to wait for a while". The EastAfrican. Nairobi. Retrieved 18 March 2019.
  29. Kasita, Ibrahim (19 September 2013). "East Africa: EAC States to Invest 40 Percent in Oil Refinery". New Vision via AllAfrica.com. Kampala. Retrieved 3 August 2016.
  30. Ludger Kasumuni (30 April 2016). "TZ to spend Sh300bn on buying stake in Uganda refinery". The Citizen (Tanzania). Dar Es Salaam. Retrieved 3 August 2016.
  31. Pearce, Fred (May 21, 2020). "A Major Oil Pipeline Project Strikes Deep at the Heart of Africa". Yale E360. Retrieved 2020-07-05.
  32. Karashani, Bob (April 11, 2020). "AfDB says no plans to fund Uganda-Tanzania pipeline". The East African. Retrieved 2020-07-05.
  33. "SA's Standard Bank Group Faces Protest Over Pipeline Funding Plan". Naija247news. 2020-06-24. Retrieved 2020-07-05.
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