Oil and Gas: Uganda, Total in fresh pipeline deal

The Uganda government and the French oil giant, Total E&P have reached a major milestone that paves the way for a final investment decision (FID) on the production of Uganda's oil.
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The Uganda government and the French oil giant, Total E&P have reached a major milestone that paves the way for a final investment decision (FID) on the production of Uganda’s oil.

This came during a meeting between President Yoweri Museveni and Patrick Pouyanné, chairman and CEO of Total, and the signing of the Host Government Agreement (HGA) for the East Africa Crude Oil Pipeline (EACOP) project. The meeting was held at State House, Entebbe on Friday.

The two agreed on the conditions of how the Uganda National Oil Company (UNOC) will join and participate in the EACOP as well as on the Host Government Agreement which will govern the export pipeline in Uganda. The project is expected to cost the consortium $3.5 billion with construction expected to start early next year. 

The Host Government Agreement aims to ensure that both countries (Uganda and Tanzania) fully benefit from the project in regards to the transportation of the crude to the international market. The Host Government Agreement will govern the construction and operation of the crude oil pipeline from Hoima to Tanzania. 

“We have today reached major milestones which pave the way to the final investment decision in the coming months. We now look forward to concluding a similar agreement with the Government of Tanzania and to completing the tendering process for all major engineering, procurement and construction contracts,” said Pierre Jessua, managing director of Total E&P Uganda.

The latest development will define the construction and management of the EACOP. Most of the sticky issues that have delayed Uganda’s FDI stretch from the law that will govern the pipeline, land rights, the composition of the shareholding, tariffs, right down to security of the project.

The oil companies wish to sign a nearly $10b FDI for Uganda’s oil industry by December 2020, an ambitious timeline to beat. Thus, the signing of the Host Agreement is a big step to first oil.

Jessua said, the conditions are set for the ramp-up of project activities and in particular, the land acquisition activities in Uganda. Total E&P committed to respecting the highest human-rights standards while carrying out these activities. The company reiterated its willingness to pursue a constructive dialogue with the communities and NGOs regarding all project activities.

“I am glad that Total and other companies licenced in the country are taking bold steps to quickly commence the production of petroleum,” President Museveni said after the event, adding that the delay was deliberate to avoid some mistakes in the processes. Museveni reiterated that Uganda’s proceeds will be used to develop infrastructure and ICT.

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“It has taken long but I want to assure Ugandans that this was deliberate. We have gone through every item. Uganda is a rich, with oil as a small fraction of this wealth. The big part is agriculture, industry, services & human resource. Oil, however, can spark off the transformation.” Museveni added. 

Total E&P Uganda is leading the development activities towards production in the Tilenga project area – Exploration Area1 (EA-1) and Exploration Area2 North (EA-2N) within the Albertine Region.


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