Uganda and Total have reached an agreement that will bring the oil firm and its partners closer to starting construction of the East Africa Crude Oil Pipeline (EACOP) project to neighbouring Tanzania.
Uganda discovered crude oil reserves estimated at 6 billion barrels in the Albertine rift basin near the border with the Democratic Republic of Congo in 2006. However, commercial production was delayed partly because of a lack of infrastructure.
A statement by oil giant said the agreement was reached during a meeting between President Yoweri Museveni and Patrick Pouyanné, Chairman and CEO of Total, the Government of Uganda and Total.
The meeting held at State House Entebbe. The Minister of Energy and Mineral Development, Mary-Gorett Kitutu, signed on behalf of the Uganda while Nicolas Terraz, the Total Exploration and Production President for Africa, signed on behalf of his employer.
The agreement protects Total’s rights and obligations in the pipeline’s construction and operation – known as the host government agreement.
Total said conditions allowing Uganda National Oil Company to join the project was also agreed.
The statement read, “We have reached an agreement on the conditions of entry of the Uganda National Oil Company (UNOC) in the project as well as on the Host Government Agreement (HGA) which will govern the export pipeline project in Uganda.
“We have today reached major milestones which pave the way to the Final Investment Decision in the coming months. We now look forward to concluding a similar HGA with the Government of Tanzania and to completing the tendering process for all major engineering, procurement and construction contracts” the statement quoted Pierre Jessua, Managing Director of Total E&P Uganda as saying.
The 1,445-km (900-mile) East African Crude Oil Pipeline, costing $3.bln, would pass through neighbouring Tanzania to the Indian Ocean port of Tanga.
Total is the major shareholder in Uganda’s oil fields after agreeing in April to buy Tullow Oil’s entire stake in jointly-held onshore fields in Uganda for $575 million.
Tullow said this week it was confident of finalising the sale in fourth quarter of this year.
The other partner in the 230,000 barrel-per-day project is China’s CNOOC.
The government said last year once pipeline construction begins, it would take 2-1/2 to three years to complete.