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Uganda, Tanzania Seal $3.5-Bln Oil Pipeline Deal

Uganda, Tanzania, and two oil majors inked a deal for the construction of a $3.5-billion pipeline that will carry Ugandan oil to the Tanzanian coast, from where it will reach international markets.

Reuters reports that the governments of the two countries signed the relevant agreements with French Total and Chinese CNOOC, which are operators of Uganda’s oilfields, after they bought them from Tullow Oil last year.

The East-African Crude Oil Pipeline (EACOP) project will be a 1,443-kilometer-long (897 miles) pipeline expected to transport oil from Uganda to the Tanga port in Tanzania. Total’s subsidiary Total East Africa Midstream is the developer of the project, says the French supermajor, which continues to pursue advantaged oil and gas resources in Africa despite ambitions to become a net-zero emissions business in Europe by 2050.

Uganda’s oil fields could give Total and CNOOC access to more than a billion barrels of crude and will cost some $5.1 billion to develop. The announcement of the final investment decision on the project was expected this Sunday.

The East-African Crude Oil Pipeline project, which has seen several delays over the past few years while the parties involved negotiated terms, will be the first piece of infrastructure of such magnitude not just in Africa but globally. It will be the longest pipeline for transporting heated crude oil and as such, has attracted a lot of criticism.

In March, a group of 260 organizations wrote an open letter to 25 banks calling on them to not take part in the $2.5-billion loan financing for the EACOP project, which, according to them, was “manifestly irresponsible”. The signatories to the letter also noted the threats that the infrastructure would pose to local communities, water supplies, and biodiversity. Further, they said that the project would “either prove financially unviable or produce unacceptable climate harm.”

By Irina Slav for Oilprice.com

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