Uganda approves construction licence for USD.3.5Bn crude pipeline

By Our Reporter

in Kampala

The development of Uganda’s nascent oil and gas sector registered yet another major milestone when Uganda has approved an application by a company controlled by France’s TotalEnergies  to construct a $3.5 billion oil pipeline that will transport the country’s crude to international markets.

The approval is a key step to developing the East African country’s oilfields where commercial petroleum production has been delayed for nearly two decades because of a lack of infrastructure and disagreements between the government , oil companies over tax issues and environment activists on matters relating to the protection of the biodiversity if the oil production areas .

The cabinet approved the application to construct the pipeline by the East African Crude Oil Pipeline Company Ltd (EACOP) at its meeting on Monday, Godfrey Kabbyanga, the state minister for information, said in an emailed statement on Thursday.

TotalEnergies is the largest shareholder in EACOP with a 62% stake. Other investors include the state-run Uganda National Oil Company and Tanzania Petroleum Development Corporation, which have 15% each, while China’s CNOOC (0883.HK) holds 8%, respectively.The planned pipeline will run from landlocked Uganda’s oilfields in the country’s west to a port on Tanzania’s Indian Ocean coast, a distance of 1,445 kilometres.

Environmentalists and rights activists have mounted a campaign against the project which they say will displace tens of thousands of people and endanger fragile ecosystems in the region.

Uganda discovered crude oil reserves in fields near the border with the Democratic Republic of Congo in 2006 but disagreements between the government and oil firms over taxes and development strategy have stymied attempts to develop them. Government geologists estimate that the country’s gross reserves stand at 6 billion barrels while recoverable oil is seen at 1.4 billion barrels.

The production of Uganda’s oil in 2025 remains on course as contractors – CNOOC and Total Energies have already shipped in the first of their oil drilling rigs for the Tilenga project after passing endurance tests at the Honghua Factory, Guanghan City in China. 

Once production commences -the oil will be transported to the sea port of Tanga in Tanzania through the East Africa Company Oil Pipeline ( EACOP) and will traverse the ten (10) districts of Hoima, Kikuube, Kakumiro, Kyankwanzi, Gomba, Mubende, Lwengo, Sembabule, Kyotera and Rakai in Uganda costing (approx. US$3.6bn).

The oil rig will be deployed to ensure the first oil production in 2025 at 400 oil wells -north of Lake Albert in Buliisa and Nyowa districts.  According to a statement from Total Energies – the ‘ZPEB Rig 1501’ is a highly innovative 1,500 Horsepower (HP) walking land rig with full integration, automation, low emission and is fully soundproofed. The rig’s 1,500 HP is equivalent to the horsepower of four heavy duty trucks.

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