Uganda–Tanzania Crude Oil Pipeline
|This article is part of the Global Fossil Infrastructure Tracker, a project of Global Energy Monitor.|
Uganda–Tanzania Crude Oil Pipeline, also known as the East African Crude Oil Pipeline (EACOP) or the Hoima-Tanga Port Oil Pipeline, is a proposed oil pipeline in East Africa.
The oil pipeline would start in Buseruka sub-county, Hoima District, in Uganda's Western Region. It would travel in a general south-easterly direction to pass through Masaka in Uganda, Bukoba in Tanzania, loop around the southern shores of Lake Victoria, continue through Shinyanga and Singida town, and end at the Port of Tanga, Tanzania, for export from the Indian Ocean. Eighty percent of the pipeline would run through Tanzania.
- Operator: Total and CNOOC
- Current capacity:
- Proposed capacity: 216,000 barrels per day
- Length: 1,444 kilometers
- Cost: US$3.5 billion
- Financing: The project's Financial Advisors are Stanbic Bank of Uganda, Sumitomo Mitsui Banking Corporation and Industrial and Commercial Bank of China
- Status: Proposed
- Start Year: 2025
The pipeline is intended to transport crude oil from Uganda's oil fields to the Port of Tanga, Tanzania on the Indian Ocean. The pipeline is planned to have capacity of 216,000 barrels per day.
Uganda previously agreed to build a joint Uganda–Kenya Crude Oil Pipeline (UKCOP) to the Lamu Port in Kenya. Concerns regarding security and cost, however, reportedly motivated parallel negotiations with Tanzania regarding a shorter and safer route to Port Tanga, with the support of the French petroleum conglomerate Total SA.
At the 13th Northern Corridor Heads of State Summit in Kampala in April 2016, Uganda officially announced its choice for the Tanzania route for its crude oil, in preference to the Mombasa or Lamu routes in Kenya. At the same summit, President Uhuru Kenyatta announced that Kenya would build the Kenya Crude Oil Pipeline on its own, thereby abandoning the Uganda–Kenya Crude Oil Pipeline (UKCOP).
In July 2016, it was announced that construction of the pipeline would begin in January 2017 and last 36 months. Completion of the pipeline was planned for 2020. In August 2017, Ugandan President Museveni and Tanzanian President Magufuli laid a symbolic foundation stone for the project.
In September 2019, Total suspended all work on the pipeline construction following the collapse of a deal to buy a stake in Tullow Oil Plc’s oil fields in Uganda. (Tullow's attempt to sell the stake in its Uganda fields was likely made under duress, as the firm's finances were collapsing in 2019–20 — a development which has also endangered the Lokichar–Lamu Oil Pipeline in Kenya.) According to a financial analyst, the Ugandan government had repeatedly stepped up borrowing to finance the project, despite the final investment decision (FID) being repeatedly pushed back; this fact had increased pressure on the Uganda Revenue Authority to win substantial capital gains tax revenues from Tullow's wind-down, thus leading to an impasse between the government and the firms backing the project. Ugandan president Museveni had also reportedly repeatedly pressed tough demands for the project's sponsors, such as also constructing a refinery (the country currently has no oil refineries). In November 2019, Ugandan government officials expressed confidence that the disagreements would be resolved.
In April 2020, the Tullow wind-down impasse was resolved, with Total reaching an agreement to buy out Tullow's shares in the Lake Albert project licenses for US$575 million, and also reaching a tax agreement with the Ugandan government. Total stated at the time that the sale would allow them, together with CNOOC, to move forward towards FID on the pipeline project. In May, Tanzania's Minister of Energy stated that construction was slated to begin in April 2021. However, the construction schedule would seem to be dependent on the project's sponsors finally reaching FID.
In September 2020, the governments of Tanzania and Uganda signed an agreement on the pipeline's construction. The agreement followed quickly on from the signing of a Host Government Agreement between Uganda and Total which protects the French company's rights and obligations in the pipeline’s construction and operation. These agreements clear the path for the FID which the parties hope to reach before the end of 2020.
In October 2020, an investigative report titled 'A Nightmare called Total' by the French chapter of Friends of the Earth and another NGO Survie, and based on collected testimonies and field surveys conducted in June and September 2020, alleged a humanitarian crisis which threatens more than 100,000 people is unfolding among Great Lakes communities affected by the development of EACOP. The report was published ahead of an appeal court hearing in Paris at the end of October where the two French NGOs are seeking a court order requiring Total to disclose how it is addressing the adverse impact of its activities, citing an obligation for the company to do so under France's 2017 Duty of Vigilance Act which applies to alleged abuses committed overseas by French companies. The report lays the blame at a shoddy environmental and social impact assessment process where civil society was not effectively consulted, resulting in inadequate mitigation proposals, especially in Tanzania where existing laws do not embrace public participation. The report also criticises the decision by the Total-led consortium to opt for open-cut trenching to lay EACOP, the lowest-cost option but one with far greater environmental impact. Experts cited by the report argue that this pipelay method will destroy biomass within 30 metres on either side of the pipeline — double what industry says is best practice — while severely contaminating the air, flora and otherwise arable land. Moreover, the oil flow through EACOP will result in gas emissions releasing 34.3 million tonnes of CO2 per annum into the atmosphere between 2025 and 2029, according to the US-based non-profit environmental consultancy E-Tech.
In April 2021, the FID for the pipeline and the two upstream components, Tilenga and Kingfisher, was reached during a signing ceremony in the Ugandan town of Entebbe. In a press release, Total noted: "These agreements open the way for the commencement of the Lake Albert development project. The main engineering, procurement and construction contracts will be awarded shortly, and construction will start. First oil export is planned in early 2025." Reacting to the signing of the agreements, David Pred, of Inclusive Development International, told The Guardian: "The oil companies are trying to dress up the investment decision signing ceremony, but fortunately this climate-destroying project is far from a done deal. Total and CNOOC still need to secure insurance and raise $2.5bn in debt financing for the EACOP to move forward and they are going to struggle mightily to find enough banks and insurance providers willing to associate themselves with such a project." Total said it had undertaken "rigorous" environmental and social risk assessment and mitigation strategies in relation to the projects, and that financing efforts for the pipeline project would proceed in accordance with the Equator Principles, a risk-management framework adopted by financial institutions for assessing and managing environmental and social risk in projects.
Critical independent review of the Environmental and Social Impact Assessment
In June 2019, the Netherlands Commission for Environmental Assessment (NCEA) published an independent quality review of the Ugandan part of the Environmental and Social Impact Assessment (ESIA) of the project, following a request from the Ugandan National Environmental Management Authority (NEMA).
The NCEA concluded that "the ESIA report does not yet provide enough information for sound decision making", citing exaggerated claims about jobs and other economic benefits; significant potential negative impacts to wetlands due to open trench water and wetland crossings; unsubstantiated claims of negligible impacts on land ownership, and; insufficient treatment of energy/CO2 impacts.
Human Rights Impact Assessments
Published by Oxfam, the International Federation for Human Rights (FIDH) and partners on EACOP on the eve of the FID in September 2020, two community-based human rights impact assessments warned of the serious challenges and future risks linked to EACOP and associated oil extraction projects. Both reports offer community-driven recommendations urging the oil companies and governments involved to take urgent measures to avoid a human and environmental disaster.
'Empty Promises Down the Line? A Human Rights Impact Assessment of the East African Crude Oil Pipeline', authored by Oxfam, Global Rights Alert, the Civic Response on Environment and Development, and the Northern Coalition on Extractives and Environment, assesses the impacts of the EACOP pipeline. The report concludes that neither the government of Uganda nor Tanzania appears to have adequately fulfilled their human rights obligations, and highlights that significant human rights and environmental risks remain and must be addressed.
'New Oil, Same Business? At a Crossroads to Avert Catastrophe in Uganda', authored by FIDH and the Foundation for Human Rights Initiative, reviews the past and present impacts of construction and exploration activities and future upstream oil extraction sites in Uganda.
Arrest of environmental activists in Uganda
Six activists from the non-governmental organisation Africa Institute of Energy Governance (AFIEGO) were arrested and detained at a police station in Kampala on October 22, 2021. This followed earlier arrests that month of AFIEGO staff.
350Africa.org has learned of the arrest of 6 climate activists from our partner organisation Africa Institute of Energy Governance (AFIEGO) under unclear circumstances. Among the 6, who were arrested in Uganda yesterday, Friday 22nd October, are a nursing mother and an ailing lady. 350 Africa.org condemns the move to arrest the 6 in the strongest terms possible and calls for their immediate and unconditional release. AFIEGO has been vocal in advocating for the rights of communities affected by the Tilenga, East African Crude Oil Pipeline and oil refinery projects.
As at August 2017, the list of potential equity partners includes: (1) The government of Uganda, represented by Uganda National Oil Company, (2) the government of Tanzania, represented by the Tanzania Petroleum Development Corporation, (3) Total SA, (4) Tullow Oil and (5) China National Offshore Oil Corporation (CNOOC). In May 2020, Tullow sold their interest in the project to Total.
Cost and financing
The 1,444-kilometer planned pipeline is expected to be built at a budgeted cost of US$3.5 billion. Thirty percent of the project costs are expected to be provided by the equity investors in the project, with the remaining US$2.5 billion to be provided via project finance loans.
Negotiations and the search for international lenders is ongoing. Uganda and Tanzania are being advised by Standard Bank of South Africa, while Total SA is being advised by Sumitomo Mitsui Banking Corporation. The London-based firm law firm Clifford Chance is advising Total SA on legal matters, while CNOOC is being advised by the the Industrial and Commercial Bank of China. Standard Bank of South Africa and Sumitomo Mitsui are also understood to be acting as joint lead arrangers for the project loan.
In April 2020, the African Development Bank (AfDB) publicly responded to a letter sent by a coalition of civil society organizations asking the bank not to fund the project. In its response, the AfDB denied that it ever considered funding the project.
In March 2021, following advocacy efforts by 263 organizations from around the world, Barclays and Credit Suisse became the first major international commercial banks to confirm that they would not participate in the financing of the pipeline project. "Barclays does not intend to participate in the financing of the East African Crude Oil Pipeline project," the UK bank said in its response to environmental and human rights organizations. Credit Suisse also confirmed it "is not considering participating in the EACOP project." The Stop EACOP coalition also commented that other banks such as United Overseas Bank (UOB) had also made statements indicating that they may not be involved in the project financing. UK Export Finance, the UK's state-backed export credit agency, also confirmed that despite having been approached to support EACOP, it would not be doing so due to a new UK government policy to end subsidies for fossil fuel projects coming into effect on March 31, 2021.
Reporting around the announcement of the project's FID in April 2021 noted that Uganda is working to finance its 15% stake in the pipeline, with the government hoping to raise US$130 million. These efforts were reported to be facing some objections from the national parliament.
In April 2021, the Stop EACOP coalition confirmed that the Australian commercial bank ANZ had ruled out support for the project. According to an ANZ statement, the proposed project was "not in line with its regional presence and strategy." The French business newspaper Les Echos also revealed that France's top three commercial banks, BNP Paribas, Crédit Agricole and Société Générale, will not be providing finance for Total's project. An anonymous source inside one of the institutions told the paper: "The decision has been taken, the project is too difficult to justify." The Italian bank UniCredit has also confirmed to civil society group Re:Common that it will not be financing the pipeline, though the bank has declined to make a public comment.
In July 2021, the major French insurer Axa informed NGOs that it would not be getting involved in the project, stating that the "project is not compatible with [their] risk appetite and, more broadly, with [their] climate commitments."
In September 2021, BankTrack disclosed that three more major banks – HSBC, Mizuho and the United Overseas Bank – have confirmed that they are not supporting the project.
Financial institutions which have confirmed they will not fund or support the pipeline
- African Development Bank
- Australia and New Zealand Banking Group
- BNP Paribas
- Crédit Agricole
- Credit Suisse
- Société Générale
- UK Export Finance
- United Overseas Bank
Articles and resources
- Uganda–Tanzania Crude Oil Pipeline, Wikipedia, accessed September 2017
- Musisi, Frederic (7 March 2016). "Oil pipeline: Which way for Uganda?". Daily Monitor. Kampala. Retrieved 7 March 2016.
- Uganda, Tanzania sign agreement for construction of crude oil pipeline, Reuters, Sep. 13, 2020
- Who's Behind EACOP?, #STOPEACOP website, accessed Jul. 12, 2021
- Uganda and Tanzania: Final Agreements for the Lake Albert resources development project, Total press release, Apr. 12, 2021
- Elias Biryabarema, and Fumbuka Ng'wanakilala (2 March 2016). "Uganda, Tanzania plan oil pipeline". Reuters.com. Retrieved 3 March 2016.
- The Independent Uganda (6 August 2017). "Uganda: Museveni, Magufuli Lay Foundation Stone for Oil Pipeline". The Independent (Uganda) via AllAfrica.com. Kampala. Retrieved 8 August 2017.
- Barigaba, Julius (6 March 2017). "Museveni's visit to Dar rescues oil pipeline deal, sets project timelines". The EastAfrican. Nairobi. Retrieved 6 August 2017.
- Biryabarema, Elias (25 June 2013). "Uganda agrees to plan for oil pipeline to new Kenya port". Reuters.com. Retrieved 28 April 2016.
- Bariyo, Nicholas (25 June 2013). "Uganda, Kenya Agree to Construct Crude export Pipeline to Port Lamu". Wall Street Journal Quoting Dow Jones Newswires. New York City. Archived from the original on 6 July 2013. Retrieved 28 April 2016. Cite uses deprecated parameter
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- Allan Olingo, and James Anyanzwa (17 October 2015). "Regional power play in tussle over new route of Uganda oil pipeline". The EastAfrican. Nairobi. Retrieved 3 March 2016.
- Abdalah, Halima (13 September 2015). "Oil firms prefer Tanga pipeline route to Lamu". The EastAfrican. Nairobi. Retrieved 3 March 2016.
- Musisi, Frederic (23 April 2016). "Uganda chooses Tanga route for oil pipeline". Daily Monitor. Kampala. Retrieved 23 April 2016.
- Musisi, Frederick (26 April 2016). "Transporting oil to Tanzania to cost UShs40,000 per barrel". Daily Monitor. Kampala. Retrieved 26 April 2016.
- PSCU (23 April 2016). "Kenya will build own pipeline, Uhuru tells EAC summit". Daily Nation. Nairobi. Retrieved 26 April 2016.
- Ligami, Christabel (16 April 2016). "As Uganda chooses Tanzania pipeline route, Kenya to go it alone". African Review. Nairobi. Retrieved 26 April 2016.
- Mugerwa, Francis (8 July 2016). "Building of Hoima-Tanzania oil pipeline will start in January". The EastAfrican. Nairobi. Retrieved 12 July 2016.
- Reuters (3 August 2016). "Tanzania aims to complete oil pipeline from Uganda in 2020". The East African Quoting Reuters. Retrieved 3 August 2016.
- The EastAfrican (5 August 2017). "Magufuli, Museveni lay foundation stone for crude oil pipeline". The EastAfrican. Nairobi. Retrieved 5 August 2017.
- Total Suspends Planned $3.5 billion Uganda-Tanzania Oil Pipe, Bloomberg, Sep. 4, 2019
- Ian Lewis, Uganda battles to revive oil project, Petroleum Economist, 21 Nov. 2019.
- Uganda underlines its intention to become a major oil and gas player, Africa News/APO Group, 23 Apr. 2020.
- Total acquires Uganda pipeline interests, Pipelines International, 21 May 2020.
- Sihle Qekeleshe, Tanzania to Construct a Crude Oil Pipeline in 2021, Africa Oil & Power, 13 May 2020.
- Barry Morgan, OPINION: Oil's foes imperil East Africa hopes, Upstream, Oct. 21, 2020.
- 'A Nightmare called Total' [in French], Les Amis de la Terre France and Survie, Oct. 20, 2020.
- French activists say 100,000 hurt by Total's Ugandan oil operation, Reuters, Oct. 20, 2020.
- Samuel Okiror, 'We cannot drink oil': campaigners condemn east African pipeline project, The Guardian, Apr. 14, 2021.
- ESIA EACOP Oil Development - Uganda, Netherlands Commission for Environmental Assessment, Jun. 27, 2019
- "Empty Promises Down the Line? A Human Rights Impact Assessment of the East African Crude Oil Pipeline", Oxfam, Global Rights Alert, the Civic Response on Environment and Development, and the Northern Coalition on Extractives and Environment, September 2020
- "New Oil, Same Business? At a Crossroads to Avert Catastrophe in Uganda", International Federation for Human Rights and the Foundation for Human Rights Initiative, September 2020
- "350Africa.org calls for the immediate and unconditional release of arrested environmental activists in Uganda ", 350Africa.org press release, Oct. 24 2021
- Musisi, Frederic (16 August 2017). "Uganda, TZ target 'flexible' European pipeline funding". Daily Monitor. Kampala. Retrieved 16 August 2017.
- Kidanka, Christopher (6 August 2017). "Tanzania ready to take up pipeline contracts". The EastAfrican. Nairobi. Retrieved 6 August 2017.
- Stanbic sees June 2019 close for $2.5 bln debt deal for Uganda's oil pipeline, Reuters, Nov. 21, 2018
- African Development Bank strongly rebuts claims that it plans to provide financial support to the East African Crude Oil Pipeline Project, African Development Bank press release, Apr. 18, 2020
- Barclays and Credit Suisse rule out supporting East African Crude Oil Pipeline in the face of growing community concern, #STOPEACOP press release, Mar. 18, 2021
- Isabelle Gerretsen, UK rules out public subsidy for East African oil pipeline, Climate Home News, Mar. 26, 2021
- Ed Reed, Total gives greenlight in Uganda, Energy Voice, Apr. 11, 2021
- Don't Bank on EACOP: Who's backing the pipeline and who's ruled it out?, Stop EACOP coalition
- Gabriel Nedelec, BNP, Société Générale et Crédit Agricole ne financeront pas le projet de Total en Ouganda, Les Echos, Apr. 21, 2021
- Axa becomes the first insurer to say no to Total's oil project in East Africa, #STOPEACOP press release, Jul. 9, 2021
- East African Crude Oil Pipeline: more banks to stay away from troubled Total project, BankTrack press release, Sep. 14, 2021
Related GEM.wiki articles
- Fred Pearce, A Major Oil Pipeline Project Strikes Deep at the Heart of Africa, Yale Environment 360, Yale School of Forestry & Environmental Studies, 21 May 2020.