East Africa: Tanzania-Uganda Concludes Multi-Billion Oil Deal
Tanzania and Uganda have signed the fifth crucial Host Government Agreement (HGA) that finally allows the construction of a 4.16billion US dollars heated pipeline to carry crude oil from western Uganda to the Indian Ocean coast in Tanzania.
The signing of the agreement took place on Thursday at the State House in Dar es Salaam, in a ceremony attended by Ugandan President Yoweri Museveni and her Tanzanian counterpart Samia Suluhu Hassan.
The two Eastern African countries and the investors, French oil company Total and China National Offshore Oil Corporation (CNOOC) have already witnessed the signing of the Memorandum of Understanding in 2017, the Host Government Agreement, Share Holder Agreement (for the pipeline company) and the Tariff Agreement, signed in April 2021 in Uganda.
Partners in the world longest electrically heated pipeline, Total and CNOOC witnessed the signing of the 1,440-kilometer-long crude oil pipeline agreement from Uganda’s Albertine region to Tanga in Tanzania.
Uganda has so far discovered over 6.5 billion barrels of oil and President Museveni says that’s only 40 per cent of the Lake Albert Zone. “Meaning there other 60 per cent,” he said. There are other potential areas with oil reserves in Uganga that includes Kalamoja in the Kadam basin.
President Museveni said the pipeline is an important infrastructure in the East African region. Burundi, DR Congo and South Sudan also have untapped oil reserve potentials. Tanzania on the other hand has made positive headways in the oil exploration of its Eyasi Wembere basin.
It is also eying to further explore oilfields in Mning’inila, Manonga and Nyaraja areas in Simiyu region with the assistance from the Ugandan counterparts.
President Samia Suluhu Hassan acknowledged the benefits that come with the project detailing that Tanzania will gain 60 per cent of the tax revenue on the pipeline, create jobs and enhance relations between the two countries. “The negotiation of the remaining agreements should also be finalized,” President Hassan said.
Tanzania implemented the Tanzania-Zambia Oil pipeline and the Mtwara-Dar es Salaam natural gas pipeline, in which the president believes it’s an advantage experience implementing the Hoima-Tanga crude oil pipeline.
Implementation work on building the pipeline will take 36 months, according to Tanzania, Energy Minister Dr Medard Kalemani. Both Tanzania Petroleum Development Cooperation (TPDC) and Uganda’s National Oil Company (UNOC) have vowed to take necessary steps to ensure the project take off immediately.
Engineer James Mataragio of TPDC said plans are going on to start compensating people affected from the project. “We are aware of the safety requirement and we promise to deliver.
Together with our EACOP partners, UNOC is ready to hit the ground running,” said John Habumugisha, the General Manager for National Pipeline Co representing UNOC.