French oil and gas exploration company Total E&P has signed a Host Government Agreement (HGA) with the Ugandan Government for the development of the East Africa Crude Oil Pipeline (EACOP) project. The HGA will govern the export pipeline in Uganda and will cost approximately $3.5 billion. Construction is expected to commence early in 2021.
The HGA will also regulate the construction and operation of the crude oil pipeline from Hoima, in Uganda, to Tanzania, benefiting both Uganda and Tanzania through the transportation of crude oil to the international market.
“We have reached major milestones which pave the way to the final investment decision in the coming months,” stated Pierre Jessua, Managing Director of Total E&P Uganda. “We now look forward to concluding a similar agreement with the Government of Tanzania and to completing the tendering process for all major engineering, procurement, and construction contracts.”
Jessua ensured that conditions will be put in place for the implementation of project activities, with a focus on land acquisition. Total E&P intends to undergo constructive dialogue with communities and NGOs involved in all project activities.
Speaking shortly after the signing ceremony, President Museveni said Uganda is a very peaceful and attractive investment destination.
He said proceeds from oil will be used to further develop the country’s other important sectors like infrastructure, education and health.
“Our oil will be used to develop our infrastructure, and ICT to enhance durable capacity of our country,”Museveni said.
“I am glad that Total and other companies licenced in the country are taking bold steps to quickly commence the production of petroleum,” President Museveni said.
Museveni reassured the exploration company of government’s support during their work.
“It has taken long, but it was a deliberate move, I can assure you Ugandans,” said the President, adding that Uganda is a rich country with oil as a small fraction of this natural wealth.
He pointed out that other potential lies in Agriculture, Tourism, Services, and Human Resource among others.
The President promised to get in touch with his Tanzanian counterpart, John Pombe Magufuli, to resolve other pending issues, especially concluding the Host Government Agreement in Tanzania.
“I congratulate Total and our Ugandan team on this milestone. We have been slow but steady and sure,” the President said.
Minister Kitutu said once the final investment decision is made by the oil companies, the opportunities for investment in the country will grow exponentially and give a boost to the economy.
She later said local companies should take advantage of this agreement to tap into opportunities in the oil sector.
Total CEO Pouyanne said this is a great achievement between the Total and the Government of Uganda.
“It was a bumpy road but I am glad we have overcome the challenges. I thank the teams from both sides that have worked tirelessly,” he said.
He commended the Ugandan President for his leadership and promised that the project would be executed successfully.
The function was attended by among others the Attorney General, Mr. William Byaruhanga.
Other agreements
Also signed between government and Total in relation to the Uganda National Oil Company was the Deed of Assignment in Relation to the Block 1, 2 and 3A Production Sharing Agreements and the Deed of Novation and Amendment with the Uganda National Oil Company in relation to the Joint Operating Agreement in respect of Exploration Areas 1, 2 and 3A
The East Africa Crude Oil Pipeline will start in Buseruka sub-county, Hoima District, and run for 1,445km to the Tanzania port city of Tanga.
When complete, it will be the world’s longest heated oil pipeline.
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