Page 4 - AfrOil Week 34 2021

AfrOil COMMENTARY AfrOil

New obstacles to oil

development in Uganda

Climate considerations appear to have forced TotalEnergies to revamp its plans for financing EACOP

THE first discovery of commercial oil reserves to push development forward. It has drawn
in Uganda was made 15 years ago, when Tullow up new plans that call for production to begin
WHAT: Oil (UK/Ireland) reported that it had struck oil in 2025, and it has made arrangements for the
The French major now at a field near Lake Albert. At the time, Tullow construction of the East Africa Crude Oil Pipe-
says the pipeline will cost was optimistic that it might be able to begin line (EACOP), which will serve as its primary
$5bn, not $3.5bn. development operations within a few years. export route. The French company joined with
Instead, it found itself running into one prob- CNOOC and the governments of Uganda and
WHY: lem after another. Tanzania in finalising a crucial set of agreements
Cost estimates have risen These problems did not disappear after on this midstream project in April 2021.
in the wake of commer- Tullow brought two partners, China National In signing these agreements, TotalEnergies
cial banks’ decision not Offshore Oil Corp. (CNOOC) and the French has passed a major milestone. The company
to fund EACOP because of company now known at TotalEnergies, on needs the pipeline to make the development of
climate concerns.
board. Even after it made the choice to unload the oilfields in western Uganda profitable.
WHAT NEXT: part of its East African portfolio in 2019, tax But now it faces another obstacle.
Standard Bank Group is disputes derailed its efforts to complete planned After securing all the necessary authorisa-
not likely to exit the pro- asset sales to TotalEnergies and CNOOC. It tions needed to start construction and establis-
ject, but pressure from therefore had to start negotiations all over again ing the EACOP consortium, which will build
environmental groups before finally coming to terms with the French and operate the pipeline, TotalEnergies is hav-
may convince other major in the spring of 2020. ing to rethink its plan for funding the EACOP
lenders to back out. Since then, TotalEnergies has worked hard project.

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