Uganda-Tanzania oil pipeline project in stalemate

Adapted from The East African 

Article by Emmanuel Onyango.

 

The execution of the 1,445km stretch of the underground crude oil pipeline from Hoima in Uganda to Tanga in Tanzania will be delayed as investors are yet to make final investment decisions over the project, which was to kick off by the end of this year.

The third ministerial meeting for the energy sectors from Tanzania and Uganda overseeing the project was held last week in Dar es Salaam and pushed the negotiations to next year, as preparatory works were incomplete despite both countries having finished their feasibility studies.

Ugandan Minister for Energy and Mineral Development Irene Muloni said: “the financial model seems to be one of the major reasons the assigned companies have not yet made the final investment decision.”

Ms Muloni said that plans to have the first oil out of the ground by 2020 are under threat because the pipeline takes about three years of construction.

The three companies assigned to run the project were expected to make their final investment decision last year, and pave the way for the pipeline construction.

They are Total Oil of France, China National Offshore Oil Corporation and Tullow Oil of the UK.

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“Had they begun on time, we would be within the timelines for the first oil,” said Ms Muloni.

Preparatory work

Tanzania’s Energy Minister Medard Kalemani detailed the preparatory work that has been completed on the Tanzanian side.

Dr Kalemani said that the works were completed in Tanga and Manyara and are ongoing in Dodoma’s Kondoa district.

They include identifying local companies and building their capacity to benefit from the project.

Construction of the underground pipeline named the Uganda–Tanzania Crude Oil Pipeline, also known as the East African Crude Oil Pipeline is expected to cost $4 billion.

The oil pipeline will start in Buseruka sub-county, Hoima, in Uganda’s Western Region and pass through Masaka in southeastern Uganda, to Bukoba in Tanzania on the southern shores of Lake Victoria and continue through Shinyanga and Singida Regions before ending in Tanga.

The pipeline will have a capacity of 216,000 barrels of crude oil per day. It will not only benefit Uganda and Tanzania but other countries in the region — Kenya, South Sudan, Rwanda, Burundi and the Democratic Republic of Congo.

The idea to build the pipeline was first discussed at the 13th Northern Corridor Heads of State Summit in Kampala in April 2016.

Uganda opted for the Tanzania route for its crude, in preference to the Mombasa or Lamu routes in Kenya.

The presidents of Kenya and Rwanda were present, along with representatives from Ethiopia, South Sudan and Tanzania. At the same summit, President Uhuru Kenyatta announced that Kenya would build the Kenya Crude Oil Pipeline on its own, abandoning a proposal to build the Uganda–Kenya Crude Oil Pipeline.

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