Page 16 - DMEA Week 19 2020

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Tanzania says work on EACOP could begin next April
TANZANIA
Construction work on the East Africa Crude Oil Pipeline (EACOP) may begin in April of next year, according to Tanzanian Energy Minister Medard Kalemani.
CONSTRUCTION work on the East Africa Crude Oil Pipeline (EACOP) may begin in April of next year, according to Tanzanian Energy Minister Medard Kalemani.
Speaking to members of Tanzania’s National Assembly on May 8, Kalemani stated that Uganda and Tanzania would be able to start work on the pipeline once they had finalised a set of key agreements – namely, host government agreements (HGAs), a land lease agreement (LLA), a ports agreement (PA) and a sharehold- ers’ agreement (ShA). The two countries hope to wrap up talks on the accords in the near future, he said.
Over the next year, he added, Tanzania’s gov- ernment will focus on completing these agree- ments and on compensating the parties that will be affected by construction. Dar es Salaam’s pro- posed budget for the 2020/2021 fiscal year allo- cates TZS1bn ($432,100) for such compensation.
In the meantime, he noted, Uganda and Tan- zania have yet to make a final investment decision (FID) on the EACOP project. They have com- pleted environmental impact assessment (EIA) studies and have held consultations with commu- nities along the proposed pipeline route, he said.
The minister did not say when the parties might reach the FID stage.
Tanzania and Uganda had originally hoped to begin work on EACOP in 2017 and bring it on stream in 2020. But they postponed the FID, partly because they were not able to reach agree- ment easily on transportation tariffs or on cer- tain provisions of the HGAs and ShA.
Another factor that led to delays was the Ugandan government’s dispute with Tullow Oil (UK/Ireland) over the tax consequences of a planned farm-out deal, under which Total (France) would have acquired part of the former company’s stakes in EACOP and in several oil- fields near Lake Albert.
That deal collapsed last year, forcing Tullow to restart negotiations with Total. The companies were finally able to strike a deal in late April. As a result, Tullow is now set to sell 100% of its stakes in the aforementioned assets to Total.
Uganda and Tanzania hope to build EACOP along a 1,445-km route from Hoima, a city near the Lake Albert oilfields, to Tanga, a port on the shore of the Indian Ocean. The link will eventu- ally allow Uganda to export crude at the rate of 216,000 barrels per day (bpd). ™
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Week 19 14•May•2020