Page 5 - AfrOil Week 15 2021

AfrOil COMMENTARY AfrOil

The parties have been negotiating the HGAs Albert fields and is expected to be completed in
since 2017, and these talks have been “more 2024. A 60,000-bpd facility has been discussed
burdensome” than any other discussions con- with construction costs estimated at $3.5bn, but
cerning EACOP, according to Tanzanian and considering the availability of feedstock, a mod-
Ugandan officials quoted by The Monitor, a ular alternative may be a more effective option.
Ugandan newspaper. These service contracts have the potential to
These difficulties are hardly surprising, in create more than 100,000 new jobs in Uganda
that the HGAs cover quite a bit of ground. They and Tanzania, both directly and indirectly. Many
spell out the obligations of each host country’s of these jobs will not be permanent; instead, they
government, while also stipulating environmen- may last for two or three years, while the pipeline
tal and other standards, investors’ duties, liability is under construction. However, EACOP’s back-
and project closure. ers say the project will involve enough informa-
In any event, Uganda’s HGA is now signed. tion and technology transfer to ensure that local
And assuming that Tanzania’s HGA can be final- contractors are able to expand their capacities
ised as quickly as anticipated, there will soon be and become more competitive. Service contracts
no more barriers to starting work on the pipeline
itself, and the parties will be able to take a final Upstream start date have the potential
investment decision (FID) on the project. Another positive consequence of the signing
The only thing left to do, said the officials of the agreements should be progress towards to create more
quoted by The Monitor, is “to tie a few loose starting production at the Ugandan oilfields that
ends.” This will include tasks such as the Ugan- will fill the pipeline. That is, now that plans for than 100,000
dan government’s re-evaluation of engineering, EACOP have taken concrete form, Total and new jobs in
procurement and construction (EPC) contracts CNOOC will be able to set a schedule for bring-
awarded by Total and CNOOC, since these two ing the Kingfisher and Tilenga sites on stream. Uganda and
companies are entitled to recover their expenses On April 11, Total’s CEO Patrick Pouyanné
after the sale of future crude production. seemed confident that the fields would be ready Tanzania, both
to launch commercial production in less than
Opportunities for contractors four years. “[This] is the beginning of a journey. directly and
As such, some observers in Uganda and Tanza- Expect the first oil tanker to dock at Tanga port indirectly
nia are optimistic about the possibility that the [to pick up Ugandan crude] in early 2025,” he
EACOP holding company might be able to wrap was quoted as saying by The Citizen, a Tanza-
up the process of evaluating bids from potential nian newspaper.
contractors within the next month. Pouyanné also talked up the size of Total’s
If so, the consortium could start construction commitment to East Africa, noting that the
work as early as July. As of press time, Total, the total cost of exploring and developing the Lake
leader of EACOP, had not said exactly when it Albert fields and building the pipeline was set to
expected to start building the pipeline. top $5bn. “It’s a very large development, one of
Meanwhile, Ugandan and Tanzanian com- the largest that will be developed on this conti-
panies are eagerly awaiting the project, which nent,” he said, according to a Bloomberg report.
is anticipated to carry a price tag or $3.55bn or It is worth noting that the volume of crude
more. A significant chunk of that sum will be flowing to market from Uganda will be relatively
spent in Tanzania, since 80% of the 1,445-km small. Kingfisher and Tilenga will eventually
pipeline will pass through that country’s ter- yield up to 260,000 bpd of oil, less than 1% of
ritory. Ugandan service providers also stand current global production, and most of these
to benefit, as that country’s government has volumes, or about 216,000 bpd, will be sent to
declared that only local companies will be market via the EACOP link. (The pipeline will
allowed to bid for contracts in 25 specific fields, have to be heated so that the waxy Ugandan
including camp management, civil works, hotel crude flows properly.) Nevertheless, oil flows
accommodations and catering, human resource will be large enough to establish Uganda as a
management, labour provision, security, survey- producer and exporter – and increase the vol-
ing and transportation and logistics. ume of foreign investment flowing into both
There is also the Hoima refinery to consider, Tanzania and Uganda by as much as 60% in the
which will receive 16,000 bpd from the Lake process. ™

EACOP shareholders

5%
8% Total
15% UNOC
CNOOC
TPDC
72%

Week 15 14•April•2021 www. NEWSBASE .com P5