Uganda-Tanzania pipeline deal draws high expectations for East Africans
Ugandan President Yoweri Museveni and Tanzanian President Samia Hassan Suluhu signed an agreement to contruct the East African Crude Oil Pipeline (EACOP).
The $3.55 billion pipeline will stretch from Uganda’s Albertine Graben region, where commercially viable oil deposits were discovered in 2006, to the Tanzanian port of Tanga. At 1,440 km, the pipeline will be the largest heated pipeline in the world and connect two oil fields—the Kingfisher field, operated by China National Offshore Oil Corporation Ltd (CNOOC), and the Tilenga field, operated by Total S.A. Contruction is anticipated to take three years, opening up the pipeline for commercial use by 2025 at the earliest.
The meeting in Entebbe also witnessed the signing among shareholders of the project, including CNOOC, Total, the Uganda National Oil Company, and the Tanzania Petroleum Development Corporation.
Hopes for job creation and long-term profits are high among many: Suluhu noted that the project is expected to create 10,000 jobs, and the World Bank estimates that, by 2030, peak oil production in the region—up to 60,000 barrels of oil per day—could earn Uganda up to $3 billion. Notably, the agreements mandate that the oil companies must award at least 30 percent of project-related contracts to local Ugandan suppliers.
The project has met resistance, though, from both the local and international community over fears of displacement of local communities, risk of environmental harm, and lack of transparency. In fact, in early March, 263 international and local civil society groups published anopen letter urging banks not to finance the project. In response to environmental concerns, Total has stated that it willlimit oil extraction from the national park to less than 1 percent of the protected area and fund a 50 percent increase in the number of rangers in Murchison Falls National Park, Uganda’s largest protected area.
For more on the challenges of effective natural resource management in the Albertine Graben region, see the relevant commentary from AGI’s Ugandan think tank partner the Economic Policy Research Centre.