Ugandan oil project awaits approval of pipeline laws

Uganda is sticking to its target for first oil from the 230,000 b/d Lake Albert development in 2025, but legislative hurdles remain relating to the project's export pipeline to Tanzania.

TotalEnergies — which is developing the project alongside Chinese firm CNOOC and Uganda's state-owned UNOC — said it has made a final investment decision but is waiting on the governments of Uganda and Tanzania to approve remaining bills governing the 1,445km East Africa Crude Oil Pipeline (EACOP).

"We are working with both governments of Uganda and Tanzania to have these bills passed as soon as possible so that we can proceed with the engineering phase," TotalEnergies' new Uganda general manager Philippe Groueix told an oil and gas conference in Kampala today.

Uganda has yet to pass three important bills related to insurance and the use of labour and local resources, while Tanzania still has two bills to approve, Groueix said. Uganda's energy minister Ruth Nankabirwa told the conference that the Ugandan bills were approved by cabinet this month and will be presented to parliament for debate in the coming weeks.

"We are working round the clock with the Ministry of Justice and Constitutional Affairs to gazette the bill, which is an enabling law for development of the pipeline, and soon enough present it to parliament for passing," Nankabirwa said. "Ugandans are eagerly waiting for the oil cash."

The Lake Albert project involves linking Uganda's 190,000 b/d Tilenga and 40,000 b/d Kingfisher oil fields by heated pipeline to Tanzania's Indian Ocean port of Tanga. It has been mired in bureaucracy for several years following protracted negotiations over upstream contract terms, tax disputes, disagreements over the pipeline route and uncertainty over the economics of a proposed domestic refinery that will run on Lake Albert crude.

The pipeline has also attracted strong opposition from environmental campaigners, with more than 260 civil society organisations from around the world calling on banks not to provide finance for EACOP because of ecological and humanitarian risks. It has been reported that this campaign, coupled with some insurance firms distancing themselves from the project, have caused the pipeline's costs to rise to $5bn. But Groueix said the original $3.55bn estimate stands, with 70pc of that expected to be raised from international lenders.

An EACOP company has been fully incorporated as an independent entity and is slated to take over all pipeline-related activities from TotalEnergies next month, Grouiex said.

By Mercy Matsiko