Eacop owners: Expect crude pipeline in 15 months
Saturday June 22 2024
Kingfisher oilfield in Kikuube, Uganda one of the areas affected by unresolved land valuation disputes on the shores of Lake Albert. PHOTO | AFP
The owners of the 1443km East African Crude Oil Pipeline (Eacop) say they want to deliver the project within 15 months.
Eacop is a $5 billion infrastructure project meant to transport 230,000 barrels of oil per day at peak production from oilfields in western Uganda to the Chongoleani peninsula near Tanga Port in Tanzania. Laying of the pipeline is expected to start “this summer”, TotalEnergies said last month.
The upstream Kingfisher and Tilenga projects – operated by CNOOC and TotalEnergies respectively – started drilling last year and say they are on course to produce oil next year.
On Thursday, Uganda’s Finance Minister Matia Kasaija said Eacop is also on track, with 500km of pipeline already delivered in Tanzania.
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“The target is to lay 100km per month,” he said, adding that he allocated to the oil and gas sector Ush920.86 billion ($248 million), which includes Ush132.6 billion ($35.7 million) for Uganda National Oil Company (Unoc) to fund additional equity contribution in the project.
Eacop covers 1,147km in Tanzania and 296km in Uganda.
Mr Kasaija said that the budget will cover the development of the Eacop hub in Tanga and construction of necessary infrastructure.
In April, Eacop Managing Director Martin Tiffen said the contractor, China Petroleum Pipeline Engineerin, will build about 16 pipelines, each 100km long, with project crews in both Uganda and Tanzania, working at multiple construction sites to meet the delivery target.
But experts warn that Eacop is a complex project that may require longer periods of work.
Works began mid-last year.
The biggest hurdle ahead of Eacop Ltd is getting the required debt financing to pay for the supply of all project equipment and works.
Proscovia Nabbanja, Unoc managing director, recently told The EastAfrican that the developers of Eacop, TotalEnergies, CNOOC, Unoc and Tanzania Petroleum Development Corporation, expect to reach financial close for about $3 billion debt financing this year, but could not point at a specific date.
The loans for debt financing are expected to come from Chinese lenders Exim Bank and Sinosure, but this week reports also indicated that South Africa’s Standard Bank had indicated that it would to come in to finance Eacop after completing their own environmental due diligence of the project.
Read: TotalEnergies audits land in Uganda, Tanzania oil projects
Uganda discovered 6.5 billion barrels of oil (of which only 1.4 billion barrels is recoverable) in the Lake Albert basin in 2006 but the process to commercialise the resource has been a long drawn out course due to tax disputes between the government and exploration companies.
But about a decade ago, the project also started to come under sustained criticism by environmental activists who say it will displace thousands of households and also pose a grave danger to the environment, as a mass emitter of greenhouse gases, which saw major lenders from Europe and the US shun financing Eacop.
But experts warn that Eacop is a complex project that may require longer periods of work.
Eacop managing director Martin Tiffen said the contractor, China Petroleum Pipeline Engineering, will build about 16 pipelines, each 100km long, with project crews in both Uganda and Tanzania, working at multiple construction sites to meet the delivery target.