East African Crude Oil Pipeline (EACOP) "On the Cards"

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East African Crude Oil Pipeline (EACOP) "On the Cards"

Tue, 01/24/2017 - 08:49
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Uganda-Tanzania_Proposed_Pipeline
Uganda-Tanzania_Proposed_Pipeline

Uganda and Tanzania have selected Gulf Interstate Engineering, a Houston-based company, to design a 1,445 km crude oil pipeline from the heavy oil fields of western Uganda near Hoima to Tanzania's Indian Ocean seaport of Tanga, dubbed the East African Crude Oil Pipeline (EACOP).

Among the many tasks, the firm's contract involves helping with "project construction specifications," a plan for project execution, the implementation schedule and writing bid documents for a process to select a contractor to develop the pipeline.

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.

Financing is unsurprisingly a key issue and both countries are looking at various debt financing scenarios. "We will have to go to the international markets to raise capital, because as countries we don't have this money," Sospeter Muhungo, Tanzania's Energy Minister, said during the launch of the Front-End Engineering Design (FEED) EACOP.

Discussions are ongoing to form a Special Purpose Vehicle (referred to as Pipe Co), to construct, own and operate the EACOP and will as well negotiate the Shareholder's Agreement, Project Financing Agreements and Transportation Agreement between shippers of oil from Tanga Port to the international market. Pipe Co will pay back the lenders from the project returns.

Gulf is expected to do its front-end work in eight months, and the Final Investment Decision is expected at the end of 2017, paving the way for construction on the pipeline to begin with crude production planned by 2020.

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