TPDC clarifies the East Africa crude oil pipeline snag

Tuesday September 10 2019





TPDC managing director, Dr James Mataragio

TPDC managing director, Dr James Mataragio 

Dar es Salaam. The Tanzania Petroleum Development Corporation (TPDC) yesterday assured the public that challenges facing the Uganda-Tanzania crude oil pipeline were normal - and that the project would be implemented according to plan.
The TPDC managing director, Dr James Mataragio, made the assurance on Monday in a public notice, which was in response to reports that the East African Crude Oil Pipeline (EACOP) project was moving at a snails pace.
He clarified that EACOP partners has so far spent a long time negotiating financial matters before striking a deal.
“The EACOP project partners are still discussing the challenges and hopefully they will soon strike a deal to implementing the ambitious crude oil pipeline project,” reads the public notice in part.
“TPDC on behalf of the United Republic of Tanzania would like to assure the public that these are normal challenges in the implementation of strategic projects.”
According to him,the project partners still have intention to cooperate with Tanzania and Uganda in implementing the project.
Therefore, he called on the public to remain patient as the project partners and the two governments conclude negotiations.
The TPDC boss was referring to a decision made in the last two weeks by the French oil giant, Total E&P, the lead developer on EACOP, to “decommission” both activities and staff on the project.
The firm cited “uncertain business” environment in Uganda following a collapse last week of a deal for Tullow Oil Company to sell its stakes to Total and China National Offshore Oil Company (CNOOC), technically referred to as a farm-down.
Total E&P, which rooted for the Tanzanian route as choice for the pipeline, established Total East Africa Midstream B.V as the interim developer for the crude oil export pipeline from Hoima in mid-western Uganda to Tanga Port at the Indian Ocean in Tanzania.
The decommissioning of activities and staff on the oil pipeline project is a result of the ongoing standoff between the Ugandan government and the joint venture partners/oil companies; Total E&P, Tullow Oil, and Cnooc, over a list of demands and objections by both sides.
The stalemate climaxed with the collapse of Tullow Oil firm’s deal to sell 21.5 per cent of its stake in Uganda to Total E&P and Cnooc, after the Sale and Purchase Agreements of the transaction expired on the same day.
Chief among the objections is the tax bill of $185 million, which President Yoweri Museveni, riding on advice tendered by technocrats in Uganda Revenue Authority and Petroleum Authority of Uganda, has insisted the oil companies must pay.
This is besides the Capital Gains Tax of $167m assessed on an earlier Tullow sales transaction.
The back-to-back developments, including collapse of the farm-down deal and suspension of activities on the pipeline, is a major setback to Uganda’s revised 2023 oil production time line.
The news is also a heart break to service providers, who over the years mobilised financing, logistical capacity and trained staffers as they prepared to cash in on chain business in the nascent sector.
TPDC is the government entity that was chosen to coordinate the supervision of the project’s activities on behalf of the Tanzania government.