Updates on the FID for Tilenga and EACOP projects by TOTAL
The FID set to be signed in Uganda for Tilenga and EACOP projects. Here are updates on the projects being spearheaded by TOTAL.
The Oil & Gas sector has had great progress in recent years, according to the Uganda Ministry Of Energy and Mineral Development. Once the Final Investment Decision is signed in March, the construction of the East Africa Crude oil Pipeline (EACOP) will begin.
Let us start by understanding the project:
Total E&P Uganda: Pioneering new technology in East Africa
In February 2012, Total E&P Uganda began operations in the Lake Albert region districts of Buliisa and Nwoya, now the TILENGA PROJECT. Total is leading the development activities towards production in the Tilenga project area. Majority of the activities are based in the Murchison Falls National Park. Working in this sensitive area requires the use of innovative and environmentally friendly exploration and drilling methods. Total E&P Uganda has recruited a dedicated team of social, environment and biodiversity experts who ensure, on a daily basis, that the activities are carried out with respect to the environment, tourism and biodiversity. The company and its partners are also currently undertaking the development of the East African Crude Oil Pipeline (EACOP).
The East Africa Crude oil Pipeline (EACOP)
This is a 1443 Kilometer crude oil export infrastructure that will transport Uganda’s crude oil from Hoima in Uganda to Chongoleani Peninsula near Tanga Tanzania. About 296 Kilometers of the pipeline will be hosted in Uganda whereas the remaining 1147 kilometers will be in Tanzania.
The Government of Uganda and Tanzania signed an agreement for the development of the East Africa Crude Oil Pipeline (EACOP) in May 2017. After which foundation stone for the pipeline was laid in August the same year. The project, however, could not proceed due to legal and environmental issues. Uganda and Tanzania signed a Host Government Agreement (HGA) to fast-track the pipeline development in September 2020.The Hoima–Tanga oil pipeline was agreed upon by the Uganda and Tanzanian governments. It is expected to connect Uganda’s crude oil to international markets.
The EACOP project is being developed by a joint venture between Total (66.7%) and China National Offshore Oil Corporation (CNOOC) (33.3%). Total agreed to acquire Tullow’s 33.33% interest in the Ugandan oil assets. As well as the oil export pipeline for a cash consideration of approximately £444 million ($575 million) in April 2020.
The pipeline is intended to transport crude oil of two oil fields namely: Kingfisher and Tilenga. They are being developed on the shores of Lake Albert by the French Total and the Chinese CNOOC. These two fields are estimated to contain up to six billion barrels of recoverable oil resources.
Let’s dive into understanding some of the benefits:
With the recently concluded general elections in Uganda: there has been a bit of uncertainty as to whether the political atmosphere is stable or not. However, with the FID signing and the Tilenga, EACOP projects , the Government of Uganda will have to ensure a conducive environment for the citizens, investors and the stake holders that will be involved in this project.
Having a harmonized political environment will create a stable atmosphere. Allowing for smooth construction of the East Africa Crude oil Pipeline (EACOP). This will go a long way in ensuring the success of the project.
As soon as the FID is signed, the projects Tilenga and EACOP will kick off. There will be tremendous changes in Uganda both economically and politically. One of the major reasons for constructing the pipeline is to connect Uganda’s crude oil to the world. There is expected interest in Uganda both from Africa and worldwide.
This will in turn give Uganda an international view thus attracting investors to Uganda. The investment to the various sectors will create employment for both locals and expatriates. The rise in number of employed Ugandans will help increase the per capita income. Therefore contributing to the increase in the Gross Domestic Product (GDP) of the country. Subsequently increasing the value of the Uganda Shilling and contributing directly to the growth of the economy.
In every country where important projects are being carried out. one of the key benefits it brings is creating employment for its citizens during the duration of the said project. The FID will help the Tilenga and East Africa Crude oil Pipeline (EACOP) create an estimated 190,000 jobs both directly and indirectly. Employment increases the per capita income which translates to an increase in the country’s Gross Domestic Product (GDP).
Due to the construction of the pipeline, investment opportunities are bound to open in other sectors: transport, agriculture and housing.
Effects to the environment
Uganda National Oil Company (UNOC) has recognized the concerns that have been raised on the impact of oil and gas project on the environment. The organization and the stakeholders have put in place quite a number of initiatives put in place to lessen the impact on the environment. They include, the legal requirement to carry out the environment and social impact assessment. Which is followed by a public hearing to address all the concerns from the different stakeholders. Total, for example, introduced the cableless technology in the acquisition of seismic data because the project is in a National Park.
The Uganda National Oil Company (UNOC) also introduced cluster drilling. With cluster drilling and extended reach wells, there has been a reduction in the footprint for the wells. 414 wells, reduced to below 36 well pads. Uganda also has a zero-flaring policy. Its wells are in National Parks and they need to be cautious of the impact of the wells on the animals, on the environment, but also on tourism as a business.
Opportunities in EACOP for investors
The East African Crude oil Pipeline represents an investment of more $3.5 billion US dollars. There are many commercial opportunities for both domestic and regional players. This is by far the biggest bilateral trade agreement between Uganda and Tanzania.
The East Africa Crude oil Pipeline EACOP will attract investors to explore the oil industry by unlocking East Africa’s oil potential. It is also expected that business opportunities will come up in various sectors of the economy. This sectors include the pipeline design, construction, and operation and decommissioning of the project,. Hence creating a trickle down economic effect spurring the development of local content.
The pipeline route will need infrastructure development such as upgrading of service roads. To help facilitate the access to and maintenance of the pipeline during its construction, operations and decommissioning phases
As we conclude, the upcoming signature of the FID for the Tilenga and EACOP projects by TOTAL will be a big step in development. It will contribute to the emergence of the Oil&Gas industry in East Africa.
Also for Uganda, having such an important project will help improve her economy. Which will make her an ideal investment destination for investors and improve the political stability, economic and social stability.
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