DRC and South Sudan to link on Uganda, Tanzania pipeline

[Geza Ulole]

 

[Geza Ulole]

 

[Geza Ulole]

 

[Geza Ulole]

New dawn as govt, oil firms seal deal to kick off production​

SUNDAY APRIL 11 2021​

President Yoweri Kaguta Museveni gestures during a meeting with Tanzanian President Samia Hassan that preceded the signing of the the East African Crude Oil Pipeline (EACOP) Tripartite Project Agreement at State House Entebbe on April 11, 2021. PHOTO/PPU

Summary​

• Today’s signing of three agreements by the presidents of Uganda and Tanzania, and the head of oil giant Total, has renewed hope that commercial oil production could finally kick off in four years’ time.

By FREDERIC MUSISI
More by this Author

The government and international oil firms—French Total E&P, and China’s Cnooc have today signed off four key agreements for commercialisation of the proposed East African Crude Oil Pipeline (EACOP), bringing to end years of protracted negotiations and setting on course Uganda’s oil project for the next phases of development and production by earliest 2025.

The high-level signing ceremony at State House, Entebbe, is expected to be attended by the newly-installed Tanzanian President Samia Suluhu Hassan, and the French oil giant, Total SA’s chief executive, Patrick Pouyanne.

Total SA is the parent company of Total E&P licensed to operate in Uganda, alongside Cnooc. The two ventured into Uganda after each acquiring 66.66 per cent stake from Anglo-Irish Tullow Oil PLC, which recently sold off its entire stake, and is currently processing winding up its operations.

The officials, speaking on condition of anonymity due to sensitivity of the matter, described today’s signing as a momentous occasion—the long-awaited moment—which is expected to mark the launch of the Ugandan oil project to get the black gold out of the ground, 14 years since the country announced discovery of commercial oil reserves in mid-western Uganda.

The agreements signd today includes two separate Host Government Agreement (HGA) between Total E&P, and the governments of Uganda and Tanzania. Energy minister Goretti Kitutu will signed on behalf of Uganda as is her Tanzanian counterpart, and Total E&P vice president for Africa on the other hand.

The HGA, which was first initialed at a signing ceremony in September last year, details vertical issues on the EACOP such as governmental obligations, investor duties, environmental and other relevant standards, liability, and project closure.

Other agreements are the Shareholders Agreement (SHA) between the four shareholders in the EACOP holding company. This will be signed by the Uganda National Oil Company (Unoc) chief executive, Ms Proscovia Nabbanja, the Tanzania Petroleum Development Corporation (TPDC) boss, and the Total E&P vice president for Africa, and the Cnooc president.

UNOC is the statutory body mandated to manage the country’s commercial interests in the oil sector, including marketing the country’s share of petroleum, and developing in-depth expertise in the sector. It manages Uganda’s 15 per cent equity stake in the EACOP.

French Total E&P owns majority 72 per cent shareholding in the EACOP, followed by Unoc with 15 per cent, Cnooc with eight per cent, and TPDC with five per cent. However, officials described Tanzania’s shareholding through its national oil company, TPDC, as tentative.

Uganda’s 15 per cent stake is in sync with the 15 per cent stake in the production licenses for each of the oil fields operated by Total E&P and Cnooc.

Also, to be signed is the Tariff and Transportation Agreement (TTA) between the pipeline company and the shippers of Uganda’s crude oil through the pipeline. The total vice president will sign on behalf of the pipeline company, Ms Kitutu on behalf of Unoc, Cnooc and Total E&P.

The signing of the agreements today was initially scheduled for last month, March 22, but was deferred to allow mourning of fallen Tanzanian president John Pombe Magufuli.

The long walk to today’s event has been punctuated with hurdles, including disappointments, protracted negotiations with the oil companies, and a plunge in prices for the international Brent crude oil.

Uganda's president Yoweri Kaguta Tibuhaburwa Museveni and deceased Tanzanian president John Pombe Magufuli interact in Tanzania on September 13, 2020 during the signing of the key agreement on oil pipeline. PHOTO/FILE/PPU
These delays over the years spawned cynicism and conspiracies of the oil being non-existent in the ground or being secretly shipped out through tankers guarded by the army, while Members of Parliament on the Committee on the National Economy—which scrutinises loan requests by the executive—late last month wondered why government continued to borrow extensively for oil related infrastructure yet nothing ever comes out.

A study last December by the London based Climate Policy Initiative (CPI) detailed that Uganda’s oil project had equally dropped in value by 70 per cent from $61b (Shs223 trillion) to $18b (Shs66 trillion) since 2015 when oil prices plunged from $100 per barrel to under $50 today.

The drop in value, according to commodity financial models run by CPI, is as a result of changes in the global oil market, including slump in prices of Brent Crude Oil—the international benchmark—and commitments by oil multinationals to the 2015 Paris Climate Change Agreement, a landmark deal signed by countries to intensify investments needed for a sustainable low carbon future.

In a world where the signatory countries, including Uganda and oil supermajors like Total E&P fully commit to the Paris Agreement, CPI detailed in the report indicated that Uganda’s oil project could at best be worth $8b (Shs29trillion).

Ugandan technocrats merely ignored the CPI findings while the government, and President Museveni who has previously inaccurately claimed his government discovered the oil, have defended that the delays are good for the country.

The start of commercial oil production, according to the World Bank, offers Uganda long-term prospects to diversify the economy and catapult it to upper middle income status by 2040.

With commercial oil production at peak in the 2030s, the Bank estimates show that Uganda could earn up to $3b (approximately Shs7 trillion) in revenues from exports of up to 60,000 barrels of oil per day. These revenues have the potential to propel the economy between 7-10 per cent forecast, up from the current stagnation of four per cent.
However, like countless other actors have chorused, the World Bank says this is only possible if revenues don’t just end up in the country’s leaders personal bank accounts but are channeled to development of human capital—education, institution building, good governance and transparency, properly managed through an efficient and transparent strategy, and if an effective sharing formula is ensured for revenues to trickle down to local government entities.

After today’s signing, officials expect Total E&P and Cnooc to announce Final Investment Decision (FID)—the availability of at least $10b (Shs36 trillion) for the development phase, followed by awarding of the Engineering, Procurement, and Construction (EPC) contracts.

Of the $10b, about $6.7b (about Shs24 trillion is for developing Total E&P’s Tilenga oil project, which included oil fields in Buliisa and Nwoya districts, and Cnooc’s Kingfisher project in Hoima and Kikuube districts, and $3.8b (Shs13.8 trillion) is the capex for the EACOP.

The awarding of EPC contracts, many of which have been evaluated over the last months, is expected to commence in the the next weeks and pave way for the development/construction phase.

The construction phase, whenever it kicks off, is expected to run for at least three years paving way for commercial oil production by the earliest, 2025. Officials, however, intimated they expected construction to start tentatively by July.

The EACOP, which runs for 1,443km from Hoima district to Chongoleani terminal in Tanga at the Indian Ocean in Tanzania, will be developed in 60:40 per cent debt to equity arrangement.

Eighty [80] per cent of the pipeline, 1,147km, will be on the Tanzanian side, and it is estimated that 80 per cent of the project capital expenditure will be spent in Tanzania. The Ugandan section of the pipeline is about 296km through 10 districts and 25 sub-counties, and 172 villages.

Another high-level [press] ceremony, attended by executives of the oil companies—Total E&P, Cnooc, government technocrats and others, is scheduled for Tuesday to announce more details to the country.

Key timelines

February 2012
Anglo-Irish Tullow oil PLC signs farm down (sales stake) to China’s Cnooc and French Total E&P.

The Ugandan government signs a Memorandum of Understanding with Tullow Oil, Total E&P, and Cnooc, detailing a roadmap for commercialisation of Uganda’s oil including developing an oil pipeline, refinery and gas to power plant.

August 2015
Uganda and Kenya agree on the northern route as the least cost for the proposed oil export pipeline.

April 2016
Total E&P and Uganda agree to the southern route through Tanzania as the “least cost” route for the proposed oil pipeline.

August 2016
The government issues production licenses for both EA1 and EA2, paving way for the technical Front Engineering Design on the oil fields.

January 2017
Tullow announces selling 21.57 percent of its interests in each of the three exploration areas to Total E&P for $900m (approx. Shs3.2trillion) behind Cnooc’s back

May 2017
President Museveni and the late Tanzanian President John Magufuli sign the Heads of State Agreement concretising the two countries to the pipeline project.

The Intergovernmental Agreement was signed on May 26 that binds the two governments on the project signed between Energy minister Irene Muloni and Tanzania’s Minister for Constitutional and Legal Affairs, Prof John Palamagamba Kabudi.

This is followed by commencement of negotiations of the Host Government Agreement, which dragged on until last year.

August 2017
President Museveni and late President Magufuli lay foundation stone for the pipeline at Chongoleani marine terminal, Tanga port at the Indian Ocean.

November 2017
President Museveni and late President Magufuli lay a second foundation stone in Rakai. A third stone was laid in Hoima by President Museveni and Tanzanian officials, a function Magufuli did not attend.

This, as Total E&P commences pre-construction studies including geophysical and geo-technical and Front-End Engineering Designs throughout 2018.

January 2019
The French oil major Total’s chief executive and chairman, Patrick Pouyanné, jetted into the country for talks the Host Government Agreement, Tullow’s sales deal, and other lingering issues in the way of negotiations.

August 2019
Tullow Oil’s attempts to farm down 21.57 per cent of its interest in each of the three exploration areas—1, 2, and 3— in Buliisa, Nwoya, Kikuube and Hoima districts, to French Total E&P and Cnooc, collapsed on August 29 following disagreements over Capital Gains Tax and payment of Income Tax.

April 2020
Total SA announces acquisition of Tullow oil’s remaining stake in Uganda for $575m (Shs2.1 trillion), with $500m paid once the deal has been approved by authorities, and $75m paid whenever Final Investment Decision (FID) is reached.

May 2020
The China National Offshore Oil Company (Cnooc) Uganda Ltd decides against—exercising its pre-emptive rights to—acquiring part of the 33.33 per cent Anglo-Irish Tullow Oil stake floated to French oil giant Total E&P last month.

This offers clarity on the shareholding structure in the upstream and hence the pipeline, clearing way for conclusion on HGA.

September 2020
The Ugandan government and Total E&P initial the Host Government Agreement at a signing ceremony at State House, Entebbe, also attended by Total global chief executive Patrick Pouyanne.

A week later, President Museveni flies to Tanzania where the declaration of the principals of the agreement is signed with the Tanzanian government.

Speaking at the 6th oil and gas convention later that month, both President Museveni and Total executives commit to reaching Final Investment Decision by end of the year.

October 2020
Total E&P officials on Oct 25, initialed the Host Government Agreement for the proposed East African Crude Oil Pipeline [EACOP] with the Tanzanian government.

This paves way for commencement of negotiations of the Shareholders Agreement that details the sharing holding structure, and the Transportation and Tariff Agreement of taking oil to the international market.

December 2020 study
A study last December by the London- based Climate Policy Initiative (CPI) detailed that Uganda’s oil project had equally dropped in value by 70 per cent from $61b (Shs223 trillion) to $18b (Shs66 trillion) since 2015 when oil prices plunged from $100 per barrel to under $50 today.

March 2021
The signing ceremony of the Host Government Agreement, the Shareholders Agreement, Transportation and Tariff Agreements is scheduled for March 22 but is deferred to April 11 following the death of Tanzanian President Magufuli the week before.

editorial@ug.nationmedia.com

New dawn as govt, oil firms seal deal to kick off production

Today’s signing of three agreements by the presidents of Uganda and Tanzania, and the head of oil giant Total, has renewed hope that commercial oil production could finally kick off

www.monitor.co.ug

 

[Geza Ulole]

 

[Geza Ulole]

Museveni calls signing of oil pipeline deal ‘third victory’ for Uganda, Tanzania​

MONDAY APRIL 12 2021​

Presidents Samia Suluhu Hassan (Tanzania) and Yoweri Museveni (Uganda) on Sunday, April 11, 2021. PHOTO | COURTESY

Summary​

• President Museveni said that when the Tanzanian route became viable, a new consideration crossed his mind -- the historical contribution of Tanzania in the liberation of Uganda in both 1978-79 and 1985-86.

By DAILY MONITOR
More by this Author

Ugandan President Yoweri Museveni has called the April 11 signing of the East Africa Crude Oil Pipeline deal between Tanzania and Uganda a "third victory" for them, saying the date is a sentimental one.

This was President Samia Suluhu Hassan's first trip outside Tanzania as head of State since she took oath of office on March 19, following the death of President John Magufuli.

“Forty two years ago, this same day, was when the Tanzanian troops of the 20th Division, under General David Msuguri, captured Kampala and enabled Ugandan army officer David Oyite Ojok to announce the fall of Idi Amin on Radio Uganda,” said President Museveni.

"At that very moment, with my rapidly growing Fronasa troops operating with another TPDF task force division under Major General Cyrus Mayunga, I was on the Mbarara front. Today, therefore, is a triple victory for Tanzania and Uganda… Ushindi wa mara tatu."

Economic victory​

Speaking at State House Entebbe, Mr Museveni said the two countries have in the past shared military and political victories, and the oil pipeline deal is an economic victory.

He said that when the Tanzanian route became viable, a new consideration crossed his mind -- the historical contribution of Tanzania in the liberation of Uganda in both 1978-79 and 1985-86.

“On these two occasions, Mwalimu Nyerere played a very important role. In the 1978-79, TPDF played a major role in removing Idi Amin from power. In 1985-86, Mwalimu Nyerere gave us 5,000 riffles at the right time, just before the assault on Kampala starting on January 17, 1986,” he said.

Tanzania's sacrifice​

On Kenya’s role, he said the two countries are brotherly, just as is the case with Tanzania.

However, he noted, historical factors touching on Tanzania make him feel indebted to it.

“I am, therefore, most satisfied that the project will make a modest contribution to the development of Tanzania. It cannot compensate for the huge sacrifice that Tanzania made for the defeat of Idi Amin, and the liberation of the whole of Southern Africa (Mozambique, Zimbabwe, Angola, Namibia and South Africa). It is just a modest contribution,“ he said.

"Moreover, this pipeline project might be the core of bigger developments if our brothers in Congo and South Sudan choose to use it for their oil, as the maximum it can carry is 230,000 barrels per day."

He added that the same corridor can take a return pipeline supplying Tanzanian and Mozambican gas to Uganda and the great lakes region.

The gas will be used to smelt the huge reserves of iron ore in Uganda, he said.

Museveni calls signing of oil pipeline deal ‘third victory’ for Uganda, Tanzania

The two countries sealed the East Africa Crude Oil Pipeline deal on Sunday.

www.theeastafrican.co.ke

MY TAKE
Reading an account of Museveni on Tanzania role in liberating Uganda makes me happy, if i were a leader in Kenya i would start assessing my foreign policies listening to a President from a country i consider most dearest to Kenya!

BTW i wonder where were Kenyatta snr and Moi? i hear they were supporting Idd Amin Dada!

CC: Tony254

 

[Geza Ulole]

Long-awaited $15b EA oil pipeline deal signed in Kampala​

MONDAY APRIL 12 2021​

Fifteen years after discovering commercially-viable crude oil deposits, Uganda begins its final journey to production. PHOTO | FILE | NMG

​

Summary​

• Signing was scheduled for March 22 in Kampala but postponed following death of President John Magufuli, who was a key driving force behind the pipeline.

By JULIUS BARIGABA
More by this Author

Fifteen years after discovering commercially-viable crude oil deposits, Uganda begins its final journey to production with the signing on Sunday of a landmark deal with Tanzania and French oil company Total.

The deal, which is expected to unlock upwards of $15 billion in investments, was signed in Kampala. President Yoweri Museveni led the Uganda delegation while Total chairman and chief executive Patrick Pouyanne led the French company’s team, The EastAfrican has learnt.

A key element of the project is the crude oil export pipeline to run from Uganda to the Indian Ocean at Tanga and Tanzania President Samia Suluhu travelled to Kampala in her first foreign trip as head of state to sign the tripartite agreement on behalf of her country.

Signing of the deal was earlier scheduled for March 22 in Kampala but was postponed following the death of Tanzania's President John Pombe Magufuli, who was a key driving force behind the pipeline.

A deal for the $3.5 billion East African Crude Oil Pipeline (Eacop) is a strategic win for Tanzania which will earn $12.7 off each barrel of oil transported through it.

Longest heated pipeline​

At peak production, the 1,445-kilometre heated pipeline which starts in Hoima in the Albertine Graben, western Uganda, and ends at Tanga Port in Tanzania, will transport 216,000 barrels of crude oil per day. Due to the waxy nature of Uganda’s oil, it will be one of the longest heated crude oil export pipelines in the world.

“Because of the pipeline, on each barrel, Uganda will lose $12.7 because of paying for the pipeline. But why don’t we concentrate on the refinery, supply Uganda and the interior part of East Africa,” President Museveni said in a TV interview in Kampala last year.

The long-awaited agreement allows Uganda to move ahead with a project that has been plagued by delays for more than a decade since the confirmation of commercial deposits.

The country’s oil deposits are estimated to have reduced in value from $61 billion in 2013 to $18 billion in 2018 due to a fall of crude oil prices on the world market, according to the Climate Policy Initiative, a UK-based research firm.

The signing is also a coming-out party for President Suluhu. After quickly taking charge of domestic matters in which she made new Cabinet appointments as well as lifting a media ban, President Suluhu has hit the ground running since taking over last month following the death of President Magufuli on March 17. The agreement cements an infrastructure bond between the two countries, which have enjoyed warm relations over the decades.

The deal is also a win for the oil companies — Total and China National Offshore Oil Corporation (Cnooc) — which have spent years haggling with a reluctant President Museveni, to expedite the crude oil export pipeline instead of his favoured domestic refinery, for faster commercialisation of Uganda’s oil.

Sources in the industry are reluctant to divulge the talking points for the summit and expected outcomes, but they indicate that “there is good will this time to move forward after years of delays”.

Yet concerns remain because Uganda is yet to secure financing to back its 15 per cent stake in Eacop, with equity. Ahead of the postponed oil summit last month.

Junior Minister for Finance David Bahati twice met Parliament’s Committees on National Economy and Budget to approve borrowing of $130 million from the domestic market to finance participation in Eacop, but on both occasions failed to get approvals.

Myriad disagreements​

The money is a precondition for signing of the final investment decision agreement, but Syda Bbumba, the chairperson of the Committee of National Economy, says her team of MPs is yet to approve the loan.

Due to disagreements with the oil companies, Uganda has pushed back FID several times, leading to delays in the commercialisation of the resource.

The parties had set December 2020 as the ultimate date for FID to pave the way for development of oil production projects Tilenga (Total operated) and Kingfisher (Cnooc operated) as well as Eacop construction, over 36 months, with first oil expected in 2024.

But the parties again missed this target due to “matters beyond the control of oil companies”, which industry sources told The EastAfrican had to do with the financiers of the pipeline taking long to give approvals.

Eacop is expected to cost around $3.5 billion, of which about $2.5 billion will be debt borrowed from banks and other financiers while 30 per cent of the project is financed through equity from the oil companies Total, Cnooc and the host governments’ entities Uganda National Oil Company and Tanzania Pipeline Development Company.

The anticipated investment is the biggest in Uganda’s history and is expected to unlock economic growth and knock-on opportunities in construction, agriculture, hospitality, real estate as well as logistics.

More than 2,000 expatriates are expected in the country to work in the oil and gas sector as Uganda looks to become East Africa’s first crude oil producer.

“The guest list is not yet confirmed, but all issues about oil will be discussed, not just the pipeline,” said Don Wanyama, spokesperson of the Ugandan presidency.

“On the issue of the pipeline I actually agreed because of our brothers in Tanzania because they are our very good friends, brothers…I don’t mind them sharing a little bit of this. Otherwise I would never have agreed to the pipeline.”

Long-awaited $15b EA oil pipeline deal signed in Kampala

The deal was signed on April 11.

www.theeastafrican.co.ke

 

[Geza Ulole]

 

[Geza Ulole]

 

[Geza Ulole]

 

[Geza Ulole]

CC: Tony254

 

[Ntaghacha]

CC: Tony254

Hii pipeline imewauma sana

 

[Geza Ulole]

Hii pipeline imewauma sana

Kuna mpumbavu mmoja anadai ati Kenya can choose to hit hard on Tanzania as it has muscles!

 

[Ntaghacha]

Kuna mpumbavu mmoja anadai ati Kenya can choose to hit hard on Tanzania as it has muscles!

Hata mm nimemsikia nimecheka Sana,hivi,Kama mtu ana nguvu,iweje apigwe mbele ya mke wake alafu akimbie kuomba msamaha? Wanajifariji,Ila ukweli wanaujua.

 

[Geza Ulole]

 

[Geza Ulole]

 

[Geza Ulole]

Oil pipeline construction ‘to start soon’​

WEDNESDAY APRIL 14 2021​

Tanzania Petroleum Development Corporation (TPDC) managing director, James Mataragio addressing the press conference in Dar es Salaam yesterday. PHOTO|ERICKY BONIPHACE

By Alfred Zacharia
More by this Author

Dar es Salaam. With theactual construction of the East African Crude Oil Pipeline (EACOP) scheduled to start any time this month, parties to the agreement have only three documents to complete in Tanzania.

The issues -- which Tanzania Petroleum Development Corporation (TPDC) says will be finalized before end of month -- include the signing of Host Government Agreement (HGA) between the government of Tanzania and investors, concluding the percentage of stake in ownership of the firm that the country (Tanzania) must take in the project and establishing the EACOP as a company.

On Sunday, President Samia Suluhu Hassan and her Ugandan counterpart Yoweri Museveni witnessed the signing of the EACOP in the Tripartite Project Agreement whereby all parties committed to the realization of the project for the benefit of all parties including the people of Tanzania and Uganda.

The agreement, signed a Uganda’s Entebbe State House, paves the way for the construction of a 1,440-km crude oil pipeline from Uganda’s Albertine region to Tanzanian seaport city of Tanga.

TPDC’s managing director James Mataragio said in Dar es Salaam yesterday that after signing of the HGA between Uganda and investors on April 11, 2021 in Entebbe, the same would be signed between Tanzania and investors before the end of this month.

“The HGA between investors and the government of Tanzania has been already discussed, agreed and initialled and at any time the signing date will be announced,” he noted.

However, the HGA cannot be signed without concluding the negotiations on the stake which Tanzania, through TPDC, should hold.

“In our HGA discussions, we suggested Tanzania, through TPDC, should take up 15 percent of the total shares. We are waiting for the cabinet to conclude and sign it,” he said.

According to him, Uganda through the Uganda National Oil Company (UNOC) holds 15 percent and CNOOC Limited holds eight percent of the total shares while Total as the main investor will take the remaining shares.

The country also has a task to register the EACOP Company which will be responsible with running the entire project.

“The construction of the crude oil pipeline is expected to begin this month and EACOP Company will take the responsibility for issuing various tenders regarding the project. The company will come into operations soon after signing the HGA,” he noted.

So far, Dr Matagio said the Shareholder Agreement for Total, CNOON, UNOC and TPDC has already been signed.

Other agreements which have already been signed by all parties include: Land Lease Agreement for Priority Areas, Land Lease Agreement for Chongoleani, Marine User Right Agreement for EACOP company, Chongoleani Marine Facility Agreement and Land Lease Agreement for Pipeline Corridor.

Dr Mataragio added that the EACOP Company will pay a total of Sh20.45 billion as compensation to people whose land will be taken for the implementation of the project.

“The Pipeline corridor area has a total size of 9,223.23 acres on the Tanzanian side, with 9,122 people who will leave their lands after being compensated,” he noted.

Dr mataragio said the country (Tanzania) will directly generate national income through various rents, during the construction and operational time of the project and Company’s expenditures of the newly Chongoleani Port (Tanga) which will be built soon.

Tanzanians will also generate incomes as individuals through various activities including employment and procurement of construction materials where some works ring-fenced Tanzanians only.

“Tanzanian investors will provide transport service to pipelines and other project equipment, security services, food and beverage services, hospitality services, human resource management, supplying fuel in the project and communication services,” he said.

A total of 350 kilometres of roads at different rates will be constructed within and out of the project area. The roads are estimated to cost $16 million (Sh36.94 billion).

Oil pipeline construction ‘to start soon’

With theactual construction of the East African Crude Oil Pipeline (EACOP) scheduled to start any time this month, parties to the agreement have only three documents to complete in Tanzania.

www.thecitizen.co.tz

MY TAKE
Tanzania is to take up 15% stake in EACOP


CC: Tony254

 

[Fundi kitasa]

Oil pipeline construction ‘to start soon’​

WEDNESDAY APRIL 14 2021​

Tanzania Petroleum Development Corporation (TPDC) managing director, James Mataragio addressing the press conference in Dar es Salaam yesterday. PHOTO|ERICKY BONIPHACE

By Alfred Zacharia
More by this Author

Dar es Salaam. With theactual construction of the East African Crude Oil Pipeline (EACOP) scheduled to start any time this month, parties to the agreement have only three documents to complete in Tanzania.

The issues -- which Tanzania Petroleum Development Corporation (TPDC) says will be finalized before end of month -- include the signing of Host Government Agreement (HGA) between the government of Tanzania and investors, concluding the percentage of stake in ownership of the firm that the country (Tanzania) must take in the project and establishing the EACOP as a company.

On Sunday, President Samia Suluhu Hassan and her Ugandan counterpart Yoweri Museveni witnessed the signing of the EACOP in the Tripartite Project Agreement whereby all parties committed to the realization of the project for the benefit of all parties including the people of Tanzania and Uganda.

The agreement, signed a Uganda’s Entebbe State House, paves the way for the construction of a 1,440-km crude oil pipeline from Uganda’s Albertine region to Tanzanian seaport city of Tanga.

TPDC’s managing director James Mataragio said in Dar es Salaam yesterday that after signing of the HGA between Uganda and investors on April 11, 2021 in Entebbe, the same would be signed between Tanzania and investors before the end of this month.

“The HGA between investors and the government of Tanzania has been already discussed, agreed and initialled and at any time the signing date will be announced,” he noted.

However, the HGA cannot be signed without concluding the negotiations on the stake which Tanzania, through TPDC, should hold.

“In our HGA discussions, we suggested Tanzania, through TPDC, should take up 15 percent of the total shares. We are waiting for the cabinet to conclude and sign it,” he said.

According to him, Uganda through the Uganda National Oil Company (UNOC) holds 15 percent and CNOOC Limited holds eight percent of the total shares while Total as the main investor will take the remaining shares.

The country also has a task to register the EACOP Company which will be responsible with running the entire project.

“The construction of the crude oil pipeline is expected to begin this month and EACOP Company will take the responsibility for issuing various tenders regarding the project. The company will come into operations soon after signing the HGA,” he noted.

So far, Dr Matagio said the Shareholder Agreement for Total, CNOON, UNOC and TPDC has already been signed.

Other agreements which have already been signed by all parties include: Land Lease Agreement for Priority Areas, Land Lease Agreement for Chongoleani, Marine User Right Agreement for EACOP company, Chongoleani Marine Facility Agreement and Land Lease Agreement for Pipeline Corridor.

Dr Mataragio added that the EACOP Company will pay a total of Sh20.45 billion as compensation to people whose land will be taken for the implementation of the project.

“The Pipeline corridor area has a total size of 9,223.23 acres on the Tanzanian side, with 9,122 people who will leave their lands after being compensated,” he noted.

Dr mataragio said the country (Tanzania) will directly generate national income through various rents, during the construction and operational time of the project and Company’s expenditures of the newly Chongoleani Port (Tanga) which will be built soon.

Tanzanians will also generate incomes as individuals through various activities including employment and procurement of construction materials where some works ring-fenced Tanzanians only.

“Tanzanian investors will provide transport service to pipelines and other project equipment, security services, food and beverage services, hospitality services, human resource management, supplying fuel in the project and communication services,” he said.

A total of 350 kilometres of roads at different rates will be constructed within and out of the project area. The roads are estimated to cost $16 million (Sh36.94 billion).

Oil pipeline construction ‘to start soon’

With theactual construction of the East African Crude Oil Pipeline (EACOP) scheduled to start any time this month, parties to the agreement have only three documents to complete in Tanzania.

www.thecitizen.co.tz

MY TAKE
Tanzania is to take up 15% stake in EACOP


CC: Tony254

Wakenya sijui walitaka 50 % ndio waganda wakawakimbia sijui😂😂😂😂😂

 

[Geza Ulole]

Oil pipeline works to start from Tanzania​

WEDNESDAY APRIL 14 2021​

ILLUSTRATION: The oil pipeline route from Hoima (Uganda) to Tanga (Tanzania).

​

Summary​

• Although officials do not state the exact start date, they say a few items need to be sorted to pave the way for works.

By Frederic Musisi
More by this Author

The construction of the proposed East African Crude Oil Pipeline (EACOP) will start on the Tanzanian side en route to Uganda, officials have revealed but without stating the start date.

Speaking yesterday at a press briefing on the oil agreements signed on Sunday, the Eacop company general manager, Mr Martin Tiffen announced that construction works on all the oil projects - Total E&P’s Tilenga in Nwoya and Buliisa districts, Cnooc’s Kingfisher in Hoima and Kikuube districts, and the pipeline - will move simultaneously.

“We are not retracting on the momentum,” Mr Tiffen said.

He explained that the pipeline would start in Tanzania because the distance is longer moving into Uganda.

Although Mr Tiffen was unwilling to provide additional details, sources told Daily Monitor that in Tanzania land acquisition is much easier because government owns the land. In Uganda the airport is not yet ready meaning construction materials have to be brought by road.

The Tanzanian pipeline section from the border town of Mutukula to Chongoleani terminal in Tanga at the Indian Ocean is 1,443km. The Ugandan section from Hoima through 10 districts of Hoima, Kikuube, Kakumiro, Kyankwanzi, Mubende, Gomba, Ssembabule, Lwengo, Kyotera to Mutukula in Rakai is 296km.

Mr Tiffen further explained that there are only few pending items in the way of starting construction works, including government giving not to the Engineering, Procurement, and Construction (EPC) contracts, and signing of the Host Government Agreement (HGA) with the Tanzanian government “expected in the coming weeks.”

Oil and gas companies often rely on EPC contractors for large-scale and long-term projects that require skilled labour and fine-tuned project management.

The Tanzanian HGA was due for signing on Sunday but was delayed due to last minute changes in Tanzania’s shareholding in the EACOP. The new shareholding structure, as detailed in the Shareholders Agreement, which defines the rights and responsibilities of the shareholders in the pipeline company as signed on Sunday, is; Uganda through Unoc with 15 per cent, Total Holdings International B.V. with 62 per cent, Tanzania through its national oil company, TPDC, with 15 per cent, and Cnooc with 8 per cent.

“The Shareholders Agreement is significant because it has constituted the EACOP Company, and will now guide the funding of shareholding, finance structure and general governance of the company,” said Energy minister Goretti Kitutu.

The EACOP funded in debt-to-equity ratios of 60:40, is expected to cost $3.5b (Shs13trillion). Total Holdings International B.V, the majority shareholder and which is domiciled in the Netherlands, is so far mum on how it will raise its lion share of project finances.

Left-Right: Total Business Development and Public Affairs Director Nathan Morgan, East African Crude Oil Pipeline (EACOP) General Manager Martin Tiffen, Ministry of Energy and Mineral Development Permanent Secretary, Robert Kasande and Total Uganda General Manager, Pierre Jessua after the press briefing at Kampala Serena Hotel yesterday. PHOTO/DAVID LUBOWA

However, at yesterday’s press conference, the Total E&P general manager, Pierre Jessua as well as Ms Kitutu and the Energy ministry Permanent Secretary Robert Kasande were upbeat about the Ugandan oil project progressing fast after Sunday’s signing of the three EACOP agreements.

“With these agreements in place, the oil companies and government will proceed with the approval and award of contracts to the main EPC contractors. This will enable the construction work for the projects to proceed.”

According to the Energy ministry, the development/construction phase is expected to generate 14,000 directs jobs, 45,000 indirect jobs by the contractors, and induced employment of another 105,000 people as a result of utilisation of other services by the oil and gas sector: 57 percent of these are expected to be Ugandans and would yield at least $48.5m (Shs175b) payments annually.

Contracts
Already, according to the ministry, contracts worth $167m (Shs604b), out of the $1.3b (approx. Shs4trillion) EPC contracts for the Tilenga and Kingfisher projects under review by the oil sector regulator—the Petroleum Authority, are to be awarded to Ugandan companies. This is however, subject to approval by government and subsequent award by Total E&P and Cnooc.

The ministry also expects that participating Ugandan enterprises in the provision of goods and services during the development/construction phase are expected rake in at least $4.2b (Shs15 trilliion), the equivalent of 28 per cent of the total expected investments of $15b (Shs54 trillion) by the oil companies over the next five years.

“This only accounts for 19 out of the over 30 work packages to be awarded by the licensees. However, it is important to note that there will be many more subcontracts given to Ugandan companies through subcontracting by the Level-1 contractors,” Ms Kitutu added.

Sunday’s signing ceremony at State House, Entebbe attended by Tanzanian President Samia Hassan Suluhu, and the French oil giant Total SE chief executive Patrick Pouyanne, Ms Kitutu revealed marked commencement of the project “and there is no document that will be signed for, or called, “FID”.

“It is a demonstration of the commitment the respective governments and oil companies have for the projects.”

Other factors kept constant, commercial oil production is expected to start the earliest, 2025.

editorial@ug.nationmedia.com

Oil pipeline works to start from Tanzania

Although officials do not state the exact start date, they say a few items need to be sorted to pave the way for works

www.monitor.co.ug

MY TAKE
GoT has upped her stake to 15% in the EACOP

CC: Tony254

 

[Geza Ulole]

TPDC's CEO