Uganda oil agreements

Martin Tiffen, the EACOP Company General Manager says the EACOP Company expects to sign a similar host government agreement in the coming weeks with Tanzania.

Tiffen said construction work of the EACOP will begin in Tanzania where close to 1147 km of the 1443km pipeline route will run. Still, Tiffen said the EACOP and the upstream projects (Tilenga and Kingfisher projects) will run concurrently.

“The sequence for the EACOP construction should begin in Tanzania and then extend to Uganda but we will take a hand-in-glove approach so that all projects start at the same time,” Tiffen said, adding that the company is in the process of getting various approvals and agreements to design contract awards.

Robert Kasande, the permanent secretary in the Ministry of Energy and Mineral Development told the media that going forward; there will be no backtracking on Uganda’s oil project.

Kasande went ahead and gave updates on auxiliary projects that are supposed to help the bigger upstream and midstream project developments. Kasande noted that Kabaale International Airport in Hoima District which is being built to facilitate the development of the projects is almost ready.

“We have progressed very significantly; the runway is almost ready to receive the first aircraft and we anticipate that by the end of this year, that will happen.” He explained that the purpose of the airport was to bring that equipment that is delicate but is required very fast.

“But also the airport is meant to facilitate the transportation of voluminous equipment and may not come via our roads and therefore we think by the time the airport is ready to bring in easily this machinery.”

Uganda’s Refinery

On the refinery, Kasande told The Independent that the original plan was to have the crude oil go to both the export pipeline and the refinery but it does not matter now.

“The crude oil may be produced and goes through the pipeline.” Kasande said work on the front end engineering design for the refinery now stands at 98%. That is being undertaken in Milan, Italy.

Until recently, Museveni had insisted that a refinery be built in Uganda to refine some of the petroleum products in-country.

“It has taken these 15 years before the first oil on account of the divergent perceptions between us and the oil companies. Initially, I did not favour the idea of the pipeline. My question was: Why export the oil? Don’t the East Africans need the oil?” Museveni said on April 11.

Museveni said he based his demand on the regional market that he says straddles the border regions of northwestern Tanzania, western Kenya, Rwanda, Burundi, eastern DR Congo, South Sudan and southwestern Ethiopia. He says the demand in the region is now 98,250 barrels per day with Uganda’s current demand standing at 38,785 barrels per day.

Museveni insists that at the price of US$ 50 per barrel (equivalent to about US$ 63 per barrel of products), locally refined petroleum, would knock off US$1.22 billion from Uganda’s import bill for petrol, diesel, jet fuel and tar for roads. If you include the petroleum by-products such as plastics, the saving on the import bill would add another US$ 400 million.

Proscovia Nabbanja, the Chief Executive Officer of UNOC said the EACOP and the upstream projects will unlock close to US$ 1.5bn which is such a substantial for the national company.

“This gives us the business imperative as a national oil company and of course strategic partnerships that we ride on and we believe that CNOOC and Total will help our capacity to get us to an operator position in the long term.”

“We urge everyone who can participate in this sector through national content; countries that have done better in this oil and gas sector are those whose citizens have participated.”

Meanwhile, Binyina also points out that although Uganda recently joined the extractives industries transparency initiative (EITI), it may not amount to anything because the government has proven over the years it lacks fiscal discipline.

“The government continues to run supplementary budgets every year.” At the community level, Binyina noted, the government also failed to learn from the mistakes that were made during the compensation exercise of project affected persons during the oil exploration phase.

“We don’t see any preparation by the government to address the challenges encountered during the upstream compensation process. The mistakes have been repeated for the EACOP project and this could breed resentment. Remember this is the longest heated pipeline in the world.”

Fredrick Njehu, the Senior Political Advisor at Greenpeace, an international environmental campaign group said April 14 that oil companies are desperately clinging onto a dying industry.

“They clearly have vested interests in keeping their pockets lined. The communities in East Africa are not interested in dirty, outdated, fossil-fuels; they are rising up and championing a future that is powered by renewable sources of energy.”

The crude oil pipeline, Njehu said, will threaten water resources, biodiversity and Uganda’s oldest and largest natural reserve, the Murchison Falls National Park, which would be opened up to large-scale of oil extraction at a time when the world is acting to urgently reduce its resilience on fossil fuels.

“No matter how you look at it, oil is highly risky and has significant potential to damage the environment and put surrounding communities in peril. East Africa has some of the best renewable energy resources in the world, and these resources should be maximized as governments shift away from fossil fuels in a people-centred just transition.

“Contrary to what proponents argue, the EACOP will not “unlock East Africa’s potential.” East Africa needs energy security based on widespread rollout of renewables and the millions of clean jobs that come with it and it needs to protect its natural heritage. African governments must prioritise innovative and just solutions for energy and not fall into neo-colonial projects that have vast environmental and climate risks.

But Pierre Jessua, the Total E&P Uganda General Manager said that although Total’s investment strategy appears to be moving towards renewable energy, there is no contradiction.

“Total is transforming from an oil company to a multi-energy company and actually the company intends to change its name to Total Energy. Are we going to stop producing oil? No,” Jessua said at the media briefing in Kampala on April 13.

“We believe that the world still needs oil and Total is a good supplier of this oil with very good standards on the technical, social and environmental aspects of the business.”

“So well believe that Total is well-placed to continue to feed the market which still needs the oil. There is no contradiction; the world needs oil and we are going to produce oil from a country which is producing oil for the first time.”

“We are accompanying Uganda and Tanzania to be part of this possibility to access an affordable energy through diligent mechanisms.”

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