Uganda discovered crude oil reserves in the western part of the country along the border with the Democratic Republic of Congo in 2006, but production was several times flunked by disagreements between the government and oil firms over tax and development strategy, and a lack of infrastructure which some players also defined as economic hindering politics that slowed down some progress making many companies like Tullow Oil sell off and leave. To many it was a dream not to come true.
It was a resilient journey and behold, on the 1st Feb, 2022, TotalEnergies and its partner China National Offshore Oil Corporation (CNOOC) reached a deal with Ugandan government (in partnership with Tanzania) to invest more than $10 billion in developing crude oil production in Uganda, using Tanzania as the pipeline to the coast.
The signing of the Final Investment Decision (FID) agreement will for the first time see Uganda drill and produce its first barrel of oil and put out a variety of oil and gas production infrastructures. The development of oil fields, processing facilities and a pipeline network in Uganda, plus an export pipeline through Tanzania to carry landlocked Uganda’s crude to a port on the Indian Ocean were already planned awaiting this historical signing of the FID to start operations.
According to Total Energies, this is a commitment to invest over $10 billion in the project. Given the magnitude of the project, over 160,000 jobs are expected to be created according to projections form government.
In line with TotalEnergies goal to reinvent energy by providing green and renewable energy solutions, the company has also signed a memorandum of understanding with Uganda to collaborate on “large scale renewable energy development projects, this will enable TotalEnergies, develop solar, wind, geothermal and other renewable technology power projects with a combined installed electricity output capacity of 1 gigawatt by 2030.
CNOOC and TotalEnergies shall handle the Tilenga and Kingfisher upstream oil projects in Uganda and the construction of the East African Crude Oil Pipeline (EACOP) in Uganda and Tanzania. The Tilenga project shall be operated by TotalEnergies and the Kingfisher project shall be operated by CNOOC and all are expected to start producing oil in 2025 and to reach a cumulative plateau production of 230,000 barrels per day.
The upstream shall be shared by TotalEnergies (56.67%), CNOOC (28.33%) and UNOC (15%). Production from the oil fields in Uganda will be transported to the port of Tanga in Tanzania through the EACOP cross-border pipeline, whose shareholders are TotalEnergies (62%), UNOC (15%), TPDC (15%) and CNOOC (8%). Uganda National Oil Company is representing the interests of the government of Uganda. Tanzania also has a stake in the pipeline company through the Tanzania Petroleum Development Corporation (TPDC)
The length of the pipeline shall be 1,440-kilometr, planned for completion in 36 months’ time and when complete, will transport crude oil from Hoima Western Uganda to the Tanzanian Port of Tanga that connects to the Indian Ocean.
Out of the whole expected investment to be between USD 10-15 billion will leave at least 4.2 billion of the expenses going to Ugandans and Ugandan companies under the local content policy, according to projections in the contact frameworks.
The Investment deal will further facilitate Uganda’s GDP growth by 22 per cent and also unlock over 160,000 jobs where over 57 per cent will be given to Ugandans, attracting 4.8 billion dollars (about 16.8 trillion Uganda shillings).