Uganda, Tanzania crude oil pipeline project on track

Dar es Salaam. A month after French oil giant Total acquired 33.334 percent of Tullow Oil’s stake, the company has assured the Tanzania government that preparation for commencement of the East African Crude Oil Pipeline (EACOP) continues.

On April 23, this year, Tullow Oil agreed to transfer Uganda’s Lake Albert Development including the (EACOP) shares to Total E&P that is the lead developer of the project from Uganda to Tanzania.

Tullow will receive $575 million; $500 million as initial payment and $75 million others will be paid after the Final Investment Decision (FID) has been made.

The agreement requires that transaction to be made subject to approval by Tullow’s shareholders, Uganda Petroleum Authority (UPA) and the China National Oil Offshore Company (CNOOC) that has 50 percent contractual rights on the shares.

But, on Friday a Total delegation led by President, Exploration and Production Arnaud Breuillac held talks with Energy ministry Medard Kalemani. The talks aimed at updating the Tanzania government on the new development. Mr Breuillac was accompanied by Total SA senior advisor to the chief executive officer, Mr Momar Nguer, senior vice president Africa for exploration and production, Mr Nicolas Terraz, director of EACOP/Tilenga Intergrated Group, Mr Martin Tiffen and Total Tanzania managing director, Mr Jean-Francois Schoepp.

Speaking during the meeting, Mr Breuillac said following the sale and purchase agreement, Total now owns 66.7 percent of upstream stake while CNOOC remains with 33.3 percent.

“We are now enabled to fast track finalisation of legal and commercial agreements to pave the way for the Final Investment Decision (FID) before commencing implementation of the Project,” he said.

Mr Breuillac said following recession in the global economy following Covid-19 outbreak, various international tender offers would be revised to reflect to the current market conditions. The two sides also discussed on plans to progress the Host Government Agreement (HGA), shareholders agreement and transportation agreement in order to harmonize the agreements before proceeding to FID.

“We commend the government for its cooperation to ensure the project is a success. We reiterate our commitments to comply with national laws and international standards of practice,” said Mr Breuillac.

Speaking during the meeting, Dr Kalemani said Total has accepted his request to fast track the project expected to start in March 2021 and be completed before the 36 months set in the deadline.

“This is because the project has been delayed already,” he said.

The Uganda government delayed sale of Tullow shares for months over tax issues until expiry of the Production Sharing Agreement (PSA) leading to stalling of the project. In September, 2019, the Tanzania Petroleum Development Corporation (TPDC) director general James Mataragio said reasons that led to stalling of the project was normal, assuring the public that it will be implemented as planned.

Mr Mataragio was speaking two weeks after Tullow Oil had failed to sell its shares to Total and CNOOC.