Uganda and Tanzania signed an agreement on their proposed $3.55 billion crude export pipeline on Friday, a key milestone for the project which is expected to start pumping Ugandan oil to international markets in three years.
The 1,445 kilometer pipeline is expected to be the Worlds longest electricity -heated oil pipeline. It is projected to be completed by 2020.
“This signing is landmark occasion after several months of negotiations,” said Ministry of Energy Permanent Secretary Stephen Isebalij, adding “the pipeline is critical in the commercialization of Uganda’s crude oil.”
“This indeed is a historical moment,” said TOTAL GM Adewale Fayemi.
Today’s signing in Kampala follows a pact between Presidents Yoweri Museveni and John Pombe Magufuli last weekend expressing intent to go ahead with the construction of the oil pipeline from Uganda to Tanzania.
The two leaders on Sunday signed a communique agreeing to start construction of the East African Crude Oil pipeline (EACOP) project that is 1,400km from Hoima in Uganda to Tanga Port in Tanzania.
An official at Uganda’s Ministry of Energy said that the agreement covered terms on tax incentives for the project, implementation timelines, the size of the pipeline and local content levels.
Adewale Fayemi, the manager for Uganda at Total, said the project will become “the longest electrically heated crude oil pipeline in the world”.
“It’s a record,” he said; adding that it will open a new phase of economic development in the region when completed.
The pipeline will be heated so it can keep the highly viscous crude liquid enough to flow.
Total is one of the owners of Ugandan oilfields, alongside China’s Cnooc and Britain’s Tullow Oil.
Total has said it is willing to fund the pipeline’s construction but has not what stake it will own in the project.
The 1,445 km pipeline will start in Uganda’s western region, where crude reserves were discovered in 2006, and terminate at Tanzania’s Indian Ocean seaport of Tanga.
Uganda estimates overall crude reserves at 6.5 billion barrels, while recoverable reserves are seen at between 1.4 billion and 1.7 billion barrels.