Page 7 - DMEA Week 10 2021

DMEA COMMENTARY DMEA

The groups signing the document described pass through 10 districts in Uganda, including 25
EACOP as a major social and environmental sub-counties and 72 villages.
risk. They sent copies of the letter to a number The French major has said in the past that it
of banks that are expected to provide part of the selected this route on the basis of several crite-
financing for the pipeline – including but not ria, including: the anticipated environmental
limited to Credit Agricole (France), HSBC (UK), impact of construction and the difficulty of con-
JPMorgan Chase (US), Mitsui UFJ (Japan), Miz- struction, with respect to topography and land
uho Securities (Japan), Société Général (France) availability. After studying its options, it has con-
and Standard Chartered Bank (Nigeria). (Total cluded that the Hoima-Tanga route represents
and its partners have said that they expect to the fastest and most economical path towards
cover about 70% of the cost of building the link completion of the pipeline.
with bank loans.) When finished, the pipeline will be able to
The primary addressees were, however, the handle 216,000 barrels per day (bpd) of oil from
three banks that are acting as transactional Blocks 1, 1A, 2 and 3A in western Uganda. Total
advisers for Total, its partner China National is serving as operator of Blocks 1 and 2, which
Offshore Oil Corp. (CNOOC) and the govern- include the Tilenga oilfield, while CNOOC is
ments of Uganda and Tanzania on the $3.55bn operating Blocks 1A and 3A, which include
EACOP project. These banks are ICBC (China), Kingfisher. These two fields are slated to begin
Standard Bank Group (South Africa) and Sumi- production in 2025 and will eventually yield at
tomo Mitsui (Japan). least 260,000 barrels per day (bpd) of crude. The
Since the publication of the letter, Standard contain waxy crude, so EACOP will have to be
Bank has announced that it will suspend its heated to facilitate oil flows.
support for EACOP pending the completion According to previous reports, development
of a new study. “We have engaged an independ- of the Ugandan blocks is likely to cost around
ent firm to help us assess the environmental $6.7bn and will include the construction of
and social impact of Total’s East African pipe- two central processing facilities (CPFs) and
line project, which environmental groups have a network of local feeder pipelines. Ugandan
opposed,” the bank said in a statement last week. authorities hope to direct around 60,000 bpd of
It indicated that its decision on proceeding with oil, or about 23% of anticipated peak produc-
funding for EACOP would hinge on the out- tion, to a refinery that will turn out petroleum
come of this study. products for the local market. The cost of this
facility, which has yet to be built, is likely to reach
Route selection $480mn.
According to previous reports, Total intends It is not yet clear whether the NGOs will also
to build EACOP along a 1,445-km path from seek to cut off funding for this refinery project.
Hoima, a town in western Uganda, to Tanga, But if they succeed in doing so for EACOP,
a port on Tanzania’s coast. The Tanzanian sec- Total may have to rethink its upstream plans in
tion of the link will be 1,147 km long, while the Uganda, where oil development is not likely to be
Ugandan section will be 298 km. The latter will profitable without an export outlet.™

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