East Africa: Key Agreements Mull to Fast-Track EA Oil Pipeline

(file photo).

TALKS on four key agreements and payment of compensations for implementation of the East African Crude Oil Pipeline (EACOP), will take place having been kept in mind during this financial year.

In the course, Tanzania has set aside 1bn/-from its 2020/21 budget to finance the aforementioned tasks.

The agreements are Host Government Agreement (HGA), Shareholders Agreement (SHA), Ports Agreement (PA) and Land Lease Agreement.

Completion of the tasks will give a room to making Final Investment Decision (FID) which would lead to starting of project construction phase.

Once the FID is undertaken, the pipeline detail design, procurement and construction will start and will last for about 36 months.

Making the revelation, Energy Minister Dr Medard Kalemani recently stated that the construction may start in April, 2021.

Speaking over accomplished tasks of the pipeline to transport oil from Hoima in Uganda to Tanga port for export to world market, Dr Kalemani explained that in the previous financial year, the contractor implemented Environment Impact Assessment and continued with educating communities along the project line.

Total East Africa Midstream B.V. (TEAM B.V.) is currently the custodian of the project.

Recently, senior management of Total SA, including the President of worldwide Exploration and Production held a meeting with Dr Kalemani to update him on the progress of the project.

The Total affirmed that the meeting signaled the strong commitment of the company and its focus on the EACOP Project, not just for Total but also for the region, Uganda and Tanzania.

"Whereas in the current global context many companies are cutting back on activities, at Total the EACOP project in Uganda and Tanzania is considered as a landmark to anticipate the rebound of the economy, building a major infrastructure corridor in this part of Africa" stated the E&P President, Arnaud Breuillac during the meeting.

Key update presented and discussed with the Minister of Energy was the impact of the new agreement with Tullow to acquire their entire interests in the Lake Albert development.

Total has informed government that the entire stake of Tullow will transfer to Total.

Consequently, Total will have 66.7 per cent of the upstream stake and CNOOC 33.3 per cent. The Uganda National Oil Company (UNOC) will soon join the upstream to take a 15 per cent share.

This agreement with Tullow will enable Total, together with CNOOC, to fast track the finalisation of legal and commercial agreements in Uganda and Tanzania paving the way for taking the Final Investment Decision (FID) and therefore execution of the Project.

Moreover, Total and the government discussed on plans to progress Host Government Agreement, shareholder agreement and Transportation Agreement discussions in order to harmonize the whole set of agreements and proceed to FID.

Furthermore, Total informed the Ministry of Energy that the significantly changed global economic situation requires updating the various international tender offers in order to reflect the new market conditions.

Total commended the government for its cooperation in ensuring the EACOP project is a success and restated its commitment to comply with national laws and international best practice standards.

The East African Crude Oil Pipeline will unlock East Africa's Potential by attracting investors to explore opportunities in the region.

The project will result to over 60, per cent increase in Foreign Direct Investment (FDI) in Uganda and Tanzania during the construction phase.

Its success will be founded on the positive collaboration and understanding of all stakeholders.

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