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Uganda looks to Oman to plug oil cash crunch
An oil rig at a well pad in Kingfisher Development Area in Kikuube District. The oil fields are expected to start producing oil this year. PHOTO/ ALEX ASHABA
What you need to know:
- The move comes amid ongoing challenges for the East African Crude Oil Pipeline (Eacop), which has seen more than $500m (Shs1.8 trillion) injected by shareholders following delays in debt financing.
The Ugandan government has set its sights on Oman, seeking to secure significant investments to address funding deficits in the country’s oil and gas projects.
This initiative, aimed at revitalising development in the sector, coincides with the upcoming East African Trade and Investment Expo (EATIX) in Oman.
As part of this effort, the Uganda National Oil Company (Unoc) has been positioned to attract Omani investors with expertise in the oil and gas sector.
The goal is to leverage Oman’s proven track record as a net producer of oil and secure much-needed funding to address project delays and shortages.
“We had a very good meeting with Unoc, and there was substantial interest expressed, even with the Uganda Investment Authority,” Mr Inga Atamba Kutesa, the honorary consul of Oman in Uganda, told Sunday Monitor on January 22.
“Oman’s expertise in the oil and gas sector is undeniable. Tapping into that not only helps fill funding gaps but also enhances Uganda’s local knowledge and expertise through knowledge transfer,” Mr Kutesa added.
This move comes amid ongoing challenges for the East African Crude Oil Pipeline (Eacop), which has seen more than $500m (Shs1.8 trillion) injected by shareholders following delays in debt financing.
At the Uganda International Oil and Gas Summit in November, Energy Minister Ruth Nankabirwa told the media: “We have not reached financial close. As shareholders, we have increased our equity.”
True to her words, the $5 billion Eacop project, a 1,443km pipeline set to transport crude oil from Uganda’s Albertine region to Tanzania’s Tanga port, has already secured $2.6 billion in equity funding. That aforementioned additional cash injection raised the shareholder financing ratio to 52 percent, comfortably exceeding the initially planned 40 percent.
The project is being developed by TotalEnergies, China National Offshore Oil Corporation (CNOOC), and the governments of Uganda and that of Tanzania. It needs cash but loans from Afreximbank ($200 million) and the Islamic Development Bank ($100 million) remain the sole debt contributions, with hopes pinned on China’s Exim Bank and Sinosure for the remaining financing.
A ray of hope?
Now Uganda is betting on Oman, more so leveraging the upcoming EATIX in April. The forthcoming event promises to connect Uganda and its neighbours—Tanzania and Kenya—with the Gulf’s economic powerhouse. Analysts predict the expo could unlock more than $25 billion in investments, a golden ticket for projects like the Kabale Industrial Park and petrochemical ventures, some of the things that even Unoc discussed in engagements with the Consulate of Oman, this publication learnt.
“And this is about more than just cash; it’s a chance to tap into Oman’s wealth of oil and gas expertise,” said Mr Kutesa. “From plastics to lubricants, the industrial potential here could revolutionise our economy.”
Leading investor TotalEnergies has doubled down on its commitment to the Eacop, injecting an additional $400m (Shs1.5 trillion) late last year. This latest boost raises its stake to a commanding 62 percent. Uganda and Tanzania, each holding 15 percent through their state entities—the Unoc and the Tanzania Petroleum Development Corporation (TPDC)—also increased their contributions by $45m (Shs164b) apiece.
Bottlenecks
But it is not all smooth sailing. Delays in securing debt financing and slow progress on the planned 60,000-barrel-per-day refinery have caused significant disruptions across Uganda’s interconnected oil projects.
Late last year, even Minister Nankabirwa acknowledged that the ambitious 2025 target for first oil is now a distant dream.
The challenge lies in aligning the pipeline’s progress with upstream developments at Tilenga and Kingfisher oil fields, which are expected to start producing oil this year. Any mismatch in timelines could derail Uganda’s broader oil agenda, making the stakes higher than ever.
Meanwhile, construction of above-ground installations for Eacop—including pumping stations, main camps, and production yards across Uganda and Tanzania—is ramping up. Developers are working to lay an ambitious 100 kilometres of pipeline per month to keep up with the demanding timelines of the $5 billion mega-infrastructure project.
Once complete, the pipeline is expected to transport 230,000 barrels of oil per day at peak production, linking Uganda’s oil-rich Albertine region to the Chongoleani peninsula near Tanzania’s port of Tanga.
But as billions are poured into this ambitious venture, Uganda’s oil aspirations rest on a knife’s edge, relying on strategic partnerships, efficient execution, and a fair bit of good fortune to bring these dreams to life.
More than just oil
Originally planned with a 60-40 debt split, the project faced significant financing challenges after human rights groups and environmentalists pressured European banks and other potential financiers to withdraw.
This left shareholders to shoulder a larger share of the costs, underscoring their commitment to seeing the project through.
However, Uganda is hedging its bets on more than just oil, especially now that Oman is coming into the picture. The Ugandan government is leveraging its development agenda through four strategic sectors: Agro-Industry, Tourism, Mineral Development, and Science, Technology, and Innovation (ATMS).
The government is eyeing Oman’s $30 billion import market, with plans to position Uganda as a vital supplier of its export produce.
Currently, this is dominated by agricultural produce. Data from the Uganda Bureau of Statistics (Ubos) shows that in 2024, Uganda exported goods worth $5.49 million from 46 exporters to 79 buyers of mainly edible fruits and dairy produce.
Mr Kutesa emphasised this opportunity, noting that exports of agro-processed goods from Uganda to Oman could gain traction via the Mombasa-Salalah trade corridor—a three-day shipping route with access to Asia, Europe, and beyond.
