Uganda and Tanzania Ink a $3.5 Billion Crude Oil Pipeline Deal

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Uganda and Tanzania Ink a $3.5 Billion Crude Oil Pipeline Deal

Tue, 09/15/2020 - 08:26
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Flag of Tanzania and the national flag of Uganda (copyright by Shutterstock/esfera)
Flag of Tanzania and the national flag of Uganda (copyright by Shutterstock/esfera)

After long and protracted negotiations, the governments of Uganda and Tanzania have signed a $3.5 billion crude oil pipeline deal.  The agreement allows for the construction of a 1,445-km pipeline connecting Uganda's prodigious oil fields to Tanzania's export terminal in Tanga.  The Tanga route, according to feasibility studies, was deemed the cheapest for Uganda to transport its oil from the production point in Hoima to the international market. It has a convenient flat terrain, not interrupted by other activities, as well as the lowest environmental challenges.

Oil reserves were found in Uganda in 2006 but production has been delayed partly by a lack of infrastructure including a transboundary pipeline. With an estimated 6 billion barrels of oil in place, Uganda has some of the biggest oil reserves in sub-Saharan Africa

A start date for construction has not yet been announced for what will become East Africa's first major oil pipeline, now dubbed the East African Crude Oil Pipeline or EACOP.

More than 80 percent of EACOP will be built in Tanzania, a massive infrastructure project by any measure, and the government expects this undertaking to provide 18,000 new jobs and a welcome shot in the arm to an economy depressed by the global pandemic. 

But there are warnings the project could come at a huge cost to some Ugandan communities:  more than 12,000 families risk losing their land and livelihoods, according to a joint report by the International Federation for Human Rights (FIDH) and Oxfam. Moreover conservationists have warned that ecosystems are at risk from the drilling in Uganda's nature reserves.

Ugandan President Yoweri Kaguta Museveni remains undeterred.  "Since we discovered the oil in Uganda, there has been a lot of debate and negotiations on terms to be applied, it's good that all these have come to an end and now, we are ready for the project."

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