Chinese firm wades into Tanzania, Uganda oil pipeline saga

What you need to know:

  • The $4 billion worth project will cover 1,445 kilometres, 80 percent of which is on Tanzanian soil, involving a 62 percent joint-venture of TotalEnergies of France.

Beijing. As the debate on the implementation of the East African Crude Oil Pipeline (Eacop) project rages on following a resolution by the European Union (EU) Parliament, hope for its implementation has been renewed after various groups – local and international – backed it.

The $4 billion worth project will cover 1,445 kilometres, 80 percent of which is on Tanzanian soil, involving a 62 percent joint-venture of TotalEnergies of France.

Recently, the EU Parliament advised Tanzania and Uganda to shelf the project for allegedly not complying with international standards on climate change precautions while convincing other stakeholders to boycott it.

As this goes on, CNOOC International, a Chinese oil and gas company that owns a stake in Uganda’s oil extraction project, has said that the project would be implemented as planned, despite recent tensions after EU move.

Speaking to The Citizen in Beijing recently, CNOOC International vice president Dan Shao said what was needed was the will of the respective States to make the project continue in any way possible, expressing that it has great developmental benefits for the people of the respective countries.

“Already we’ve invested a lot of money, but it is normal for all big projects or those projects with massive investments to face challenges such as this one. We’ll ensure that the investment is executed by all means possible,” reassured Mr Dan.

The boss of CNOOC, which owns an 8 percent stake in the oil pipeline project, said the deal would only stop if it had no commercial value and the decisions made had violated the laws of the respective countries but not because of a lack of funds for implementation.

“The issue of investment funds is nothing if the project makes sense commercially, there is a lot of money in the credit markets around the world looking for borrowers, since the project is good, the money will be there,” he said.

However, he said he would not think their partners (TotalEnergies) would withdraw from the project because of what is going on, adding that even though that happened, the project would continue because of its commercial viability.

Last week, Eacop, on its website, made it clear about compensations for those to be affected by the project, which is among the points raised by EU Parliament condemning unfair treatment to those affected.

In its clarification statement, it mentioned that as the oil pipeline construction was expected to start at the end of this year, only 331 out of the 9,513 victims of the project in Tanzania would be moved to other settlements, where their houses were under construction.

“For Uganda, of 3,648 households, 203 will be required to leave their homes, and most of them have chosen alternative houses, which are also under construction,” reads the statement.

Recently, the chief executive officer of Standard Bank Group in the East African region, Mr Patrick Mweheire, was quoted by the Bloomberg News as saying that the project would benefit both countries--Tanzania and Uganda.

In his clarification, Mr Mweheire, whose Standard Bank Group is an international bank that is influential in the financing of large development projects in Africa, said the implementation of the project would also reduce the effects of deforestation.

“One of the biggest issues in Uganda is that 70 percent of domestic fuel comes from charcoal and firewood, so they cut down a lot of trees,” he said.

Besides Mr Mweheire, East African Community (EAC) Secretary General Peter Mathuki put it clear through on his twitter account, saying: “The project provides answers to long-term challenges in this region. Economic benefits for our people, in EAC we care about people and the environment.”

Despite the fact that EU Parliament resolution is not legally binding, there is the influence of some activists and financial institutions that pressure TotalEnergies to withdraw from the project investment because of what they call violation of environmental and human rights.

The activists protested in front of European Parliament on September 10.

The EU Parliament has summoned the chief executive officer of TotalEnergies, Mr Patrick Pouyanné, while Ugandan President Yoweri Museveni said he would be ready to find another investor if the French firm pulled out, insisting that Uganda’s plan to produce oil by 2025 ha not changed.