Tanzania sign Agreement with Uganda to construct Crude oil pipeline


JF-Expert Member
Dec 21, 2009
Credit: George Obulutsa; Editing by Susan Fenton

NAIROBI (Reuters) - Tanzania and Uganda signed an agreement on Sunday paving the way for the construction of a crude oil pipeline running from Ugandan oilfields to the Tanzanian port of Tanga, a Tanzanian government spokesman said. Uganda discovered oil reserves in 2006 and needs the planned 1,445-km (900-mile) East African Crude Oil Pipeline to be in place to start commercial production. The pipeline is estimated to cost $3.5 billion, according to the two governments.

Hassan Abassi, Tanzania government spokesman, said on Twitter that 80% of the pipeline will run through Tanzania. Tanzania will earn 7.5 trillion shillings ($3.24 billion) and create more than 18,000 jobs over the next 25 years, or more, that the project is in place, Abassi said after the signing ceremony attended by Tanzania’s President John Magufuli and Ugandan President Yoweri Museveni in Chato, northwestern Tanzania.

Uganda has not given a date for when construction of the pipeline will begin but said last year that once construction begins, it would take 2-1/2 to three years to complete. The agreement on the pipeline construction comes days after French oil company Total TOTF.PA said it had reached an agreement with Uganda protecting its rights and obligations in the pipeline's construction and operation - known as the host government agreement.

Total is the major shareholder in Uganda's oilfields after agreeing in April to buy Tullow Oil's TLW.L entire stake in the jointly held onshore fields in Uganda for $575 million. Tullow said last week it was confident of finalising the sale in the fourth quarter of this year.

The other partner in the 230,000 barrel-per-day project is China's CNOOC 0883.HK.

Uganda, Tanzania sign agreement for construction of crude oil pipeline

Wenye wivu wajinyonge.


JF-Expert Member
Dec 21, 2009
Credit: Bloomberg

Tanzanian President John Magufuli said he agreed with his Ugandan counterpart on the sharing of profit from a jointly-planned $3.5 billion crude-export pipeline.

“We have agreed that Tanzania will take 60% of the profits and Uganda will remain with 40%,” Magufuli said in a televised event on Sunday from his hometown of Chato after a meeting with Ugandan President Yoweri Museveni.

The accord is yet another milestone that, alongside agreements between the governments and companies led by Total SA, bring closer a final investment decision for the project. The share arrangement is partly based on Tanzania’s role in building and operating 1,115 kilometers (693 miles) of the conduit, according to Magufuli. Uganda will be responsible for the 330 kilometer-section in its territory.

Total is leading plans to build the conduit from Uganda’s oil fields in the west of the country to the Tanzanian port of Tanga along with partner Cnooc Ltd. of China and the two governments. Uganda, which discovered commercially viable crude deposits in 2006, has an estimated 6 billion barrels of oil resources and plans to start pumping crude from the ground in 2023-24.

Museveni and Magufuli are moving to make up for lost time in developing the pipeline, after Tullow Oil Plc in April agreed to sell its Ugandan assets to Total. The sale had been delayed partly by tax disagreements with Ugandan authorities.
On Saturday, Total Chairman and Chief Executive Officer, Patrick Pouyanne met with Museveni and agreed on issues regarding the host government. Concluding a similar accord with Tanzania, whose territory the pipe will traverse, allows the French major to complete the tendering for all engineering, as well as procurement and construction contracts.

“The total investment of building just the infrastructure of the project in both Uganda and Tanzania will exceed $16 billion during the lifetime of the project,” Museveni said. “This doesn’t include what we will earn.”

Tanzania’s national oil company said in June it expects a final investment decision for the pipeline in December.

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