Uganda, Tanzania sign $3.5 Billion Pipeline Deal

Lake Albert, where Uganda’s oil reserves are located, acts as a natural border between Uganda and the Democratic Republic of the Congo (Wiki Commons)

Uganda, Tanzania, and oil firms Total and Chinese National Offshore Oil Corporation (CNOOC) signed accords on April 11 to begin the construction of a $3.5 billion crude oil pipeline. The East African Crude Oil Pipeline (EACOP) will run 1445 kilometers from Ugandan oil fields to the Tanzanian coast, where the oil will be shipped internationally from Tanzanian seaport Tanga. The parties signed three agreements: a Tanzanian and Ugandan accord to authorize the pipeline, a tariff and transportation agreement, and a shareholding agreement. Despite government officials citing economic growth as a potential benefit of the pipeline, national and international organizations have accused EACOP’s signatories of ignoring significant environmental and societal risks in signing the accords. 

Uganda discovered crude oil reserves near Lake Albert in 2006. Government geologists estimated that the reserves held nearly 6 billion barrels of oil. However, only 1.4 billion barrels can currently be accessed. Given that Uganda is a landlocked country and the crude oil is viscous, it requires an electrically heated pipeline to keep the oil liquid and to ship it internationally. Total CEO Patrick Pouyanné stated that the pipeline will be the largest project developed in Africa and will require more than $10 billion in investments. Once at peak production (around 230,000 barrels per day), Uganda’s reserves could last 30 years. 

However, the signing of the accords received strong pushback from local and international organizations. More than 250 NGOs signed a letter on March 1 urging the executives of 25 major banks to avoid extending loans to fund EACOP. The letter referenced documented risks that could displace local populations, damage biodiversity and natural habitats, and increase carbon emissions. Several French and Ugandan environmental organizations launched a legal campaign to prevent EACOP’s construction, or at the minimum, to compel Total to ensure that EACOP will not cause irreversible environmental and societal damage. 

In addition, environmental groups questioned Total’s claim that EACOP will create nearly 60,000 jobs. They argue that after the construction of the pipeline, only 300 permanent jobs will remain. Ugandans also criticized the secrecy around the signing of the accords, raising suspicions of corruption; in the past, Ugandan President Yoweri Museveni alluded to the possibility that the commercialization of Uganda’s oil could help him remain in power. Africa Institute for Energy Governance’s Senior Communications Officer Diana Nabiruma accused Ugandan and Tanzanian officials of rushing the authorization of EACOP before the countries’ citizens could understand how environmental and societal risk would be mitigated. 

Construction for EACOP is expected to begin later this year, with the pipeline’s first shipments hitting international markets in 2025. However, EACOP must secure insurance and raise billions of dollars before moving forward with construction.