Uganda and Tanzania sign $3.5 billion oil pipeline deal

Uganda and Tanzania have signed a US$3.5 billion deal to build an oil pipeline which will transport crude from the former’s Lake Albert oil fields to the Tanzanian port of Tanga.

The deal, signed on Sunday by Ugandan President Yoweri Museveni and Tanzanian President John Magufuli, comes as a boost to Uganda’s plans to develop an oil industry in the Lake Albert region, which have so far failed to take off.

A start date for construction of the 1,445 km East African Crude Oil Pipeline has not yet been announced, although it is expected to take up to three years to complete.

Last week, French energy major Total established a Host Government Agreement governing the export pipeline project in Uganda and the conditions of entry of the Uganda National Oil Company in the project.

Total is the major shareholder in Uganda’s oil fields after agreeing to buy Tullow Oil’s stake in onshore fields for $575 million in April. It will work alongside Chinese state-owned CNOOC to develop the fields.

Oil reserves predicted at 6 billion barrels were discovered in 2006 by Tullow, however development has been repeatedly delayed due to a lack of infrastructure and complaints surrounding its impact on local communities and Uganda’s nature reserves.