Uganda approves construction license for $3.5 billion crude oil pipeline

By EK Benj & Reuters – Updated at 0540 EAT on Wednesday 25th January 2023

Uganda has approved an application by a company controlled by TotalEnergies to construct a 3.5 billion U.S. dollar oil pipeline that will transport the country’s crude to international markets, Godfrey Kabbyanga, the state minister for information, said in a statement on Thursday.

According to a Reuters report, the approval is a crucial step to developing the East African country’s oilfields. Commercial petroleum production has been delayed in the fields for nearly two decades because of a lack of infrastructure and disagreements between the government and oil companies.

TotalEnergies is the largest shareholder in the East African Crude Oil Pipeline Company Ltd (EACOP) with a 62 percent stake. Other investors include the state-run Uganda National Oil Company and Tanzania Petroleum Development Corporation, which have 15 percent each.The planned pipeline will run from landlocked Uganda’s oilfields in the country’s west to a port on Tanzania’s Indian Ocean coast, a distance of 1,445 kilometers.

Speaking at the launch of the King Fisher Drilling Launch on Tuesday, President Yoweri Kaguta Museveni said “The British had tried to look for this oil when they were here from 1920 and what made them look for the oil were the seepages that were coming to the surfaces. They went on looking for this oil till 1956.”

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The Minister of Energy and Mineral Development, Hon Nankabirwa R S officially handed over a certificate to EACOP to start the Pipeline construction with immediate effect.

This petroleum resource will be here for a long time and we have more. Added Museveni

Investment in development of the Kingfisher oilfield is expected to be over US$ 2 billion over the next 3 years until shortly after production starts and up to US$1.63billion over the remaining 20 years of the life of the oil field.

US$ 346 Million was invested in the Kingfisher project in 2022 bringing the total cumulative investment in the project to US$ 1.07 billion. About $580 Million is expected to be invested in KFDA in 2023.

At the current oil prices of about $87.5 per barrel, the Kingfisher project will account for about 15% of the total oil revenues to government from upstream, which is $6.9billion in total and $360million per year.

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