The construction of The East African Crude Oil Pipeline is expected to commence soon according to both Tanzania and Ugandan government officials.
Works on the 1,443km crude oil export infrastructure, due to run from the Albertine valley to Tanzania’s port of Tanga are estimated at $3.5 billion.
Ministry of Energy Permanent Secretary Robert Kasande was quoted by Reuters as saying parties are now “in the final stages of negotiating a shareholders’ agreement” for the pipeline.
“We expect construction of the pipeline to start shortly after we have finalized FIDs (final investment decisions), and we expect to conclude the FIDs by the end of March,” Kasande added.
Last week, Tanzania’s foreign minister Palamagamba Kabudi confirmed that he had met with Total’s Director for Africa, Nicolas Terraz, while on a visit to Paris and discussed the project.
“They said everything is set,” he told reporters in Dar es Salaam. “The construction of the pipeline will begin in the second half of March. This is a great step and the construction will be completed in 2024.”
However, Total has declined to comment on the matter.
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. Government geologists estimate overall reserves at 6 billion barrels.
Total and China’s CNOOC now own Uganda’s oil fields after Britain’s Tullow exited the country last year.
The start of commercial crude production has been repeatedly delayed by a lack of infrastructure needed to export the oil from landlocked Uganda and by disagreements over field development strategy.
About two thirds of the pipeline’s cost will be financed by debt, and a Ugandan unit of South Africa’s Standard Bank Group and Japan’s Sumitomo Mitsui Banking Corp are jointly helping to raise the funding.
The government has said that once pipeline construction begins, it would take two-and-a-half to three years to complete.
Uganda is eager to accelerate the plan to begin pumping crude and earning petrodollars, which President Yoweri Museveni hopes will help revive an economy hit hard by the coronavirus pandemic.