Uganda and French oil conglomerate Total have inked a deal that will open the way for construction of an oil pipeline to neighbouring Tanzania, Total’s local subsidiary has disclosed.
While Uganda discovered crude oil reserves about 14 years ago, commercial production has been delayed partly due to lack of infrastructure, including an export pipeline.
The proposed 1,445-km (900-mile) East African Crude Oil Pipeline, costing US$3.5 billion, is expected to pass through neighbouring Tanzania to the Indian Ocean port of Tanga.
Reuters reported that Total had reached an agreement with Uganda protecting its rights and obligations in the pipeline’s construction and operation.
Total and Uganda Authorities are expected to actualise the agreement in the coming months, according to Pierre Jessua, Managing Director of Total E&P Uganda.
Total said it is looking forward to sealing a similar deal with Tanzania., including all the tendering for procurement and construction contracts.
President Yoweri Museveni and Total Chief Executive Officer Patrick Pouyanné also permitted the entry of Uganda National Oil Company into the project.
Total Oil is the major stakeholder in Uganda’s oil fields. This is after it bought out UK-based Tullow Oil from Uganda’s onshore fields for US$575 million.
Tullow is yet to make its final exit, expected by the end of 2020. China’s CNOOC is the other partner in the 230,000 barrel per day Uganda’s oil machine. The Uganda oil pipeline is expected to take two to three years to complete.
Uganda discovered crude oil reserves estimated at 6 billion barrels in 2006 at the Albertine rift basin near its the border with the Democratic Republic of Congo.
While Uganda gears up towards full commercial oil production and export, Kenya is still stuck in squabbles with UK-based Tullow over taxation and other incentives with Tullow threatening to quit oil exploration in Turkana.
With the Kenya Government giving in to pressure, Tullow has since lifted the freeze it had placed on the oil exploration project. Kenya made its first oil discovery in 2012.