Uganda, Tanzania ink deal for crude oil pipeline construction

AGREEMENT: The leaders of Uganda and Tanzania on Sunday signed an agreement for the construction of a crude oil pipeline, linking Uganda’s oil fields in the country’s west to the Indian Ocean Port of Tanga, a Tanzanian government official said.

Hassan Abassi, Tanzania government spokesman, said on Twitter that 80 per cent of the pipeline will run through Tanzania providing thousands of jobs.

Uganda struck oil back in 2006 and needs the planned 1,445km Crude Oil Pipeline to ship its oil through the port of Tanga.

The pipeline is estimated to cost Sh350 billion, according to the two governments.

Signing ceremony

Tanzania expects revenues of upto Sh324 billion and create more than 18,000 jobs over the next 25 years, Abassi said after the signing ceremony attended by Tanzania’s President John Magufuli and Ugandan President Yoweri Museveni in Chato, northwestern Tanzania.

“Held a meeting with His Excellency John Pombe Magufuli in Chato, Tanzania, we discussed a number of issues of bilateral interest to our countries.

Importantly, we discussed issues around the East Africa Crude Oil Pipeline project,” Museveni tweeted. 

Uganda did not specify when construction of the pipeline would begin, however they had earlier said that  it would take them between two and three years to complete.

President Magufuli said that the country would utilise Uganda’s experience to explore for oil in several of its regions.

“When we strike oil, we will simply connect those areas to the East Africa Crude Oil Pipeline,” he added, during the signing ceremony.

Pipeline deal

The pipeline deal comes days after French oil company Total said it had reached an agreement with Uganda to protect its rights and obligations in the pipeline’s construction and operation – known as the host government agreement.

Total acquired Tullow’s entire 33.3 per cent stake in licenses in Uganda, as well as its stake in the pipeline for Sh5.8 billion. 

In addition to the Ugandan and Tanzanian governments, it will now develop the pipeline with the Chinese firm CNOOC Ltd.

However conservationists warn that the project could come at a huge cost to some Ugandan communities. 

A report by the International Federation for Human Rights and Oxfam has warned that ecosystems are at risk from the drilling in Uganda’s nature reserves. 

Kenya whose proposal to build the Uganda–Kenya Crude Oil Pipeline with Uganda  flopped said it will build its crude pipeline on its own.