Oil pipeline firm applies for construction licence

Officials inspect some of the developments in the East African Crude Oil Pipeline project. PHOTO/ FILE

What you need to know:

  • The application is a requirement under the pipeline, refinery  legislations.

The governments of Uganda and Tanzania have commenced a review of the application for the construction licence for the proposed East African Crude Oil Pipeline (EACOP).

The EACOP company executives submitted the applications in both countries last week. 
The EACOP company general manager in Uganda, Mr Martin Tiffen, submitted the application to the Petroleum Department, the policy arm of the Ministry of Energy, in Kampala on Friday.

The application and the attendant bureaucratic evaluations brings development of the 1,443km duct one step closer and comes as a setback to the anti-EACOP brigade, which mounted the campaign to pressure financial institutions around the world to walk away from the project.

The application for the licence is a requirement under Midstream (pipeline, refinery) legislations, including the Petroleum (Refining, Conversion, Transmission and Midstream Storage) Act and the Petroleum (Exploration, Development and Production) Act.

The acting director of the Petroleum Directorate, Mr Honey Malinga, told Monitor yesterday the review process for the construction licence will be conducted in consultation with the relevant government agencies.

“The pipeline construction touches on so many things, which we all must carefully look at. Issues of disturbance, environment, land, compensation, and so on, so we must carefully look at each to ensure it is in compliance with the laws,” he said.

Asked about the expected issuance timeframe for the licence, Mr Malinga said the process leading to involves consultation with the relevant government agencies, departments, and agencies, but added that the plan is for the country to start commercial oil production in the first quarter of 2025.

The construction of the pipeline, Mr Tiffen told this newspaper earlier on, is expected to start early next year.  

During the next six months, the pipeline company is racing against time to fast-track acquisition of the project right of way across 27 sub-counties, three town councils and 171 villages in 10 districts.

The EACOP will run 1,443km from the oil fields in Hoima in mid-western Uganda to the Indian Ocean Tanga Port in Tanzania. The Tanzania section runs for 1,147km through 25 districts and eight regions.

China’s China Petroleum Pipeline Engineering will lead the construction coordinated by Australia’s WorleyParsons Ltd, which was awarded the Engineering, Procurement, and Construction Management tender.

Worley Parsons’ lead on the project, Mr David Bishop told Monitor that they are committed to ensuring that development of the project conforms to international best practices, and in sync with both Uganda and Tanzania laws. The capex for development of EACOP is between $3b-4b.

Discussions on project financing, officials say, are in advanced stages. 
Currently, one official intimated, they are working with the equity pooled by the shareholders to the bank account in London.

French TotalEnergies hold a 62 percent stake in the project, Uganda and Tanzania each holds 15 percent, and Chinese oil company, CNOOC, Eight percent.

Meanwhile, the Russia-Ukrainian conflict has since sent prices of several construction materials, including the required line pipe, up but executives say they are working around the clock for swift supply chains.

One official intimated that one of the tricks they employed was to delay procurement of most materials because it would augment the project cost.