TotalEnergies, CNOOC Make Final Decision On $10 Billion Uganda, Tanzania Oil Project

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TotalEnergies and its partner China National Offshore Oil Corporation (CNOOC) have reached a deal with Uganda and Tanzania to invest more than $10 billion or sh36 trillion in developing crude oil production in East Africa.

Patrick Pouyanné, TotalEnergies Chief Executive and chairman told a ceremony in Kampala that February 1, 2022 is a “day of happiness” for all the companies involved in the projects as well as for the people of Uganda.

“In the name of the joint venture partners and… TotalEnergies, I declare the final investment decision for the Lake Albert development project,” Pouyanné said in an event that was broadcast on television.

The ceremony was held in the presence of Yoweri Museveni, President of the Republic of Uganda, Philip Mpango, Vice-President of the United Republic of Tanzania among other development project partners.

The project will cover the development of oil fields, processing facilities and a pipeline network in Uganda, plus an export pipeline through Tanzania to carry landlocked Uganda’s crude to a port on the Indian Ocean.

All partners are committed to implementing these projects in an exemplary manner, taking into consideration the environmental and biodiversity stakes, as well as the rights of the concerned communities, in accordance with the stringent performance standards of the International Finance Corporation (IFC).

In this context, the land acquisition program is currently underway, incorporating areas of improvement identified by independent third-party reviews performed after the first phase of this program led in 2018-2019.

Uganda discovered crude oil reserves near its border with the Democratic Republic of Congo in 2006, but production has been repeatedly delayed by disagreements between the government and oil firms over tax and development strategy, and a lack of infrastructure.

CNOOC Uganda Limited president Chen Zhuobiao said the FID is “a step towards unlocking more opportunitues for investment and development for Uganda”. CNOOC is in charge of the Kingfisher oil field.

TotalEnergies, a French company, is leading the construction of a crude oil pipeline from Hoima in western Uganda to Tanga, a port of Tanzania. This pipeline is expected to be the longest heated underground pipeline in the world.

“This milestone puts us on the path to first oil in 2025,” Minister of Energy and Mineral Development Ruth Nankabirwa Ssentamu said in a speech ahead of the signing.

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In a tweet, she added: “An estimate of $3b (sh10 trillion) investments is expected this year and $15b (sh52 trillion) and $20b (sh70 trillion) in the next three to five years. The planned $15-$20b investment after the FID will facilitate Uganda’s Gross Domestic Product (GDP) growth by 22% and also unlock over 60,000 jobs, where over 57% will be given to Ugandans, attracting $48m annually.”

Close to 160,000 jobs are expected to be created during the project’s development, Ssentamu said.

Government geologists estimate that the country’s gross reserves stand at 6 billion barrels, while recoverable oil is seen at 1.4 billion barrels.

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