Uganda set to announce $3.5bn investment into its oil sector

Uganda is close to announcing a final investment decision on a US$3.5 billion deal with French oil major Total and CNOOC on Sunday, according to local media reports.

The project is the East-African Crude Oil Pipeline (EACOP), a 1,443-kilometer-long (897 miles) pipeline expected to transport more than one billion barrels of crude oil from Uganda to the Tanga port in Tanzania.

According to the country’s petroleum ministry, the total cost of the plan will be $20 billion when it is fully delivered. The current deal involving the EACOP is expected to be around $3.5bn, with banks expected to stump up $2.5bn.

Total is pursuing the Tilenga upstream project and the East African Crude Oil Pipeline (EACOP). Its partner, CNOOC Ltd will develop the Kingfisher upstream project.

Ugandan Ambassador to Tanzania Richard Kabonero confirmed that the EACOP project would be signed on April 11, following a meeting in Kampala.

Uganda discovered crude reserves in the Albertine rift basin in the west of the country near the border with the Democratic Republic of Congo in 2006 and government geologists estimate overall reserves at 6 billion barrels according to Reuters report.

Total and China’s CNOOC now own Uganda’s oil fields after Britain’s Tullow exited the country last year.

Media reports say Patrick Pouyanné, Total chief executive, is expected in the country over the weekend, quoting officials from Uganda’s energy ministry.

Tanzania’s President Samia Suluhu Hassan is also traveling to Kampala to take part in the three-way talks that should culminate in the signing of the deal.

The project had suffered delays in recent times due to changes in partnership structure and protracted negotiations with the Ugandan government on the deal.

The investment will unlock billions of dollars of investment in Uganda’s oil and gas sector and set off rivalry with major African oil producers including Nigeria and Angola.

France’s Total, China’s CNOOC, the governments of Uganda and Tanzania are shareholders in the pipeline project.

Uganda discovered commercial oil deposits in its mid-western region over 14 years ago but extraction has delayed due to the protracted negotiations with the oil majors.

Proscovia Nabbanja, CEO of Uganda National Oil Company, said earlier this month that the firm’s “number-one priority for 2021 is to unlock the sector together with government and our partners – achieving the FID will launch EACOP and the upstream project. The projects will also open up a lot of opportunities for investment.”