25 January 2019

Tanzanian Delegation in Uganda for Oil Pipeline Negotiations

Photo: Daily News
Uganda-Tanzania Oil Pipeline (file photo).

Ugandan and Tanzanian officials are meeting in Kampala for another round of negotiations on the host government agreement for the East Africa Crude Oil Pipeline.

Sources at the Energy ministry have indicated that at least four ministers from Tanzania are already in Uganda for the ministerial meeting to be held at Kampala Serena hotel. The team includes Dr Adelardus Kilangi, Tanzania's attorney general.

Uganda Energy ministry permanent secretary, Robert Kasande confirmed the arrival of the Tanzania delegation but was hesitant to divulge details about the meeting that could set off the construction of the $4bn project.

Uganda and Tanzania signed the Inter-Governmental Agreement (IGA) in May 2017 for the East African Crude Oil Pipeline (EACOP) project. The agreement provided the foundation for other project agreements, like the host government agreements, shareholders' agreements and financing agreements, which have since not been signed.

The joint venture partner CNOOC, Total and Tullow Oil have in the past indicated that the conclusion of the host government agreement could be key in the commercialisation of the Albertine region oil and gas.

Construction of an over 1,149km-long pipeline from Kabaale, Hoima in Uganda to Chongoleani in Tanga, Tanzania should have started had the governments agreed on the remaining agreements.

The delay in construction of the pipeline together with other impediments, have pushed government to extend its first oil ambition earlier set for 2020 to 2021.

Uganda is expected to pay Tanzania a minimum of $12.20 per barrel of oil, according to the past negotiations between the two governments. Initial estimates put the capacity of the pipeline at 216,000 barrels of crude oil per day. In a related development, sources indicate that the National Environment Management Authority's (NEMA) oil and gas team is expected to review the Environmental Social Impact Assessment (ESIA) report for the pipeline project.

NEMA is required to ensure that the project doesn't significantly affect the environment and people's livelihoods.

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