Uganda, Tanzania, French-owned oil company Total, and the China National Offshore Oil Corporation (CNOOC) have all signed three agreements which will invest $3.5 billion into a 1,445-kilometer pipeline. It will run from western Uganda’s oil fields to the Tanzanian port of Tanga.
The East African Crude Oil pipeline (EACOP), which is expected to commence in 2025, will cost around $10 billion and is expected to produce nearly 220,000 barrels of crude oil per day at an estimated $13.30 per barrel. EACOP is cited to be the world’s largest heated oil pipeline and production, which is scheduled to begin this year, is purported to result in the establishment of 10,000 jobs.
“The Tilenga development and EACOP pipeline project are major projects for Total and are consistent with our strategy to focus on low breakeven oil projects while lowering the average carbon intensity of the Group’s upstream portfolio. These projects will create significant in-country value for both Uganda and Tanzania,” Patrick Pouyanné, chairman and chief executive officer of Total, said in a statement.
The pipeline was originally planned to run through Kenya as it would provide a cheaper route. The presidents of Uganda and Kenya designed a route in 2015 that would end at the port of Lamu on the Indian Ocean, with officials even going as far as signing a preliminary agreement.
However, in 2020, Tullow, an Irish oil and gas company that was the majority stakeholder in the pipeline, sold their Uganda share to Total. In what was considered a security concern, Total worried about the Lamu route being too close to the border of Somalia and perceived exposure to attacks from Al-Shabaab, an Islamist militant group based in East Africa and Yemen.
After the discovery of a vast quantity of natural gas off the coast of northern Mozambique in 2010, a race to secure oil resources in East Africa began. Total, as well as the US-based ExxonMobil and Italy’s Eni, have secured investments in the development of Mozambique’s oil resources, including the Mozambique Liquefied Natural Gas (LNG) project.
Attacks from the Al-Shabaab group have targeted projects related to the oil company’s developments, which led to the government of Mozambique in August 2020 signing a security pack with Total and ExxonMobil to support the continued development of the LNG project.
As recently as March 2021, Al-Shabaab attacked a town in Cabo Delgado, the northern province of Mozambique where the project was set to resume, causing Total to withdraw its employees and force delays on the project.
Environmentalists have also shown resistance to the rise in oil-based projects in East Africa. Citing risks to the Uganda-Tanzania pipeline, activists claim developments will lead to the physical and economic displacement of people in both countries, as well as destroy 2,000 square kilometers of the ecosystem.
Several civil society organizations across both East African countries have co-signed a letter which states that Total and CNOOC failed to address the environmental concerns, steamrolling over the court and parliamentary processes.
— StopEACOP (@stopEACOP) April 19, 2021
Earlier this month, more than 260 African and international organizations sent an open letter to 25 different commercial banks, urging them not to finance the construction of the pipeline. According to The Guardian, Total has since said they had undertaken an environmental and social risk assessment and mitigations strategies in relation to the project.
“Total is also taking into the highest consideration the sensitive environmental context and social stakes of these onshore projects. Our commitment is to implement these projects in an exemplary and fully transparent manner,” Pouyanné has said in response to the concerns.
In reports from the Guardian, Robert Kasande, permanent secretary at Uganda’s ministry of energy and mineral development also commented saying, “We are very mindful of the environment that we work in. It’s a very sensitive ecosystem. So we have put everything that we need to do in place.”
“These resources that are going to be coming into the country are going to be a huge boost to this economy,” he added.
In wake of the deal, Tanzanian President Samia Suluhu Hassan pledged on Monday to strengthen cooperation with the World Bank in the East African country’s goal for economic development during talks with Mara Warwick, the World Bank’s country director for Tanzania, Malawi, Zambia, and Zimbabwe.
The pipeline will take about three years to build, and the hope is that it will unlock billions of dollars into the economy of both Uganda and Tanzania, setting East Africa up to be a new international oil tycoon.