Oil pipeline construction set to start early next year  

Construction of the East African Crude Oil Pipeline (EACOP) will start in the first quarter of 2024, a year to the 2025 deadline for first oil.  

Mr John Bosco Habumugisha, the EACOP deputy managing director, revealed this, noting that early preparation for civil works of the pipeline route are ongoing and construction of main camps, with the main contractor expected to take over early next year. 

“We are preparing a handover to the construction company. So, when I say first quarter, we also need to receive additional materials such as pipes, and other elements. But there are many things to do right now as we wait for pipes,” he said. 

EACOP Limited received a construction license in January, which enables the company to kick start development of the 1,443km, 24-inch diameter heated pipeline.

This had followed an application to the Energy Ministry in July 2022, which gave a go ahead for the construction of the pipeline that is expected to start after construction of temporary facilities such as a coating plant at the pipeline’s midpoint, and the 16 main camps and piping yards roughly every 100 kilometres along the right of way. 

The China Petroleum Pipeline Engineering Company, which is a subsidiary of state-owned China National Petroleum Corporation, is the main contractor of the pipeline construction, feedlines and other above ground installations.   

Other contractors include Austratria’s WorleyParsons that will undertake engineering, procurement, and construction management and French multinational, Bollore Logistics, which will be responsible for end-to-end receiving, storage, handling and transportation of cargo, including more than 80,000 joints of 18 metre line-pipe, multiple heavy-lift operations and significant break-bulk and containerised cargo transportation.  Energy Minister Ruth Nankabirwa, in May confirmed that the China Export-Import Bank, and two other African countries had agreed to finance the $3b debt required for the EACOP pipeline. 

The pipeline’s financing efforts had been beset by the Stop EACOP movement that de- campaigned the project over climate concerns.  The financing is expected to be syndicated stretching EACOP to other African and Islamic banks.  

The long heated pipeline, starts at Kabaale in Hoima District in Uganda to a marine storage terminal at Tanga, in Tanzania.  The cost estimates for EACOP stands at $5b (Shs18.6 trillion) with 60:40 percent debt to equity ratio. This implies close to $3b (Shs11.2 trillion) will be secured as debt, while $2b (Shs7.45 trillion) will be equity financed by shareholders. 

EACOP declared funding from Saudi’s Islamic Development Bank, and Afrexim Bank totaling to $300m (Shs1.1 trillion).    

The shareholders include Total Energies at 62 percent, Uganda National Oil Company at 15 percent, Tanzania Petroleum Development Corporation at 15 percent, and China National Offshore Oil Corporation at 8 percent.  

Funding 

Mr Habumugisha, said the pipeline continues to receive funding from shareholders as they work on other aspects of funding.

“There might be challenges along the way, but we are still on schedule for 2025,”  he said at the signing of a memorandum between EACOP and Uganda Petroleum Institute, Kigumba, which seeks to provide a working framework to guide collaboration towards realisation of the project’s national content capacity building initiatives.                           

Its worth noting that given the nature of the project, skilled Ugandans are expected to take part in the construction of the pipeline with multiple national and international contractors and suppliers engaged in assembling, supply and construction of the pipeline and associated equipment such as pumping stations.                                        

The memorandum will cover key areas such as internships. 

[email protected]