Tanzania, Uganda sign deal on $3.5bn crude oil pipeline

Photo courtesy of Pumps Africa

TANZANIA – Tanzania and Uganda have signed an agreement to commence construction on a 1,445-kilometre crude oil pipeline running from Ugandan oilfields to the Tanzanian port of Tanga, a Tanzanian government spokesman said.

The project focuses on oilfields in landlocked Uganda discovered in 2006 near Lake Albert and proposes pumping the crude to the coast via a pipeline across Tanzania.

The pipeline is estimated to cost of $3.5 billion.

According to Mr. Hassan Abassi, the Tanzanian government spokesman, 80% of the pipeline will run through Tanzania.

The multi-national plan is led by French petroleum giant Total in partnership with China National Offshore Oil Cooperation (CNOOC) and struggling British group Tullow Oil which is seeking to finalise selling its stake in the venture.

Tanzania is expected to earn $3.24 billion and create more than 18,000 jobs over the next 25 years, or more that the project is in place said  Abassi  after the signing ceremony attended by Tanzania’s President John Magufuli and Ugandan President Yoweri Museveni in Chato, north-western Tanzania.

Work is scheduled to start by the end of the year on the East African Crude Oil Pipeline and is expected to take up to two and half years to complete.

The agreement on the pipeline construction comes days after French oil company Total said it had reached an agreement with Uganda protecting its rights and obligations in the pipeline’s construction and operation – known as the host government agreement.

Reserves in the area are conservatively estimated at some 1.7 billion barrels.

Total is the major shareholder in Uganda’s oilfields after agreeing in April to buy Tullow Oil’s entire stake in the jointly held onshore fields in Uganda for $575 million.

The other partner in the 230,000 barrel-per-day project is China’s CNOOC.

Tanzanian President John Magufuli said that the project is a very crucial project for his people as it will not only create jobs but also promote cooperation within the region and stimulate economic development in areas the pipeline crosses.

The enormous pipeline will run south of Lake Victoria to the port of Tanga near the Kenyan border.

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