February 2022, Vol. 249, No. 2


East Africa Boost: Uganda Pipeline Approval Underway

By Shem Oirere, Contributing Editor, Africa 

Uganda has now completed a draft bill, which, when passed into law by Parliament, will pave the way for the enactment of legislation that facilitates the implementation of the $3.5 billion East African Crude Oil Pipeline project. 

The country’s Cabinet approved the East African Crude Oil Pipeline (EACOP) Bill 2021 in early October 2021, which now awaits tabling in Parliament by Energy and Mineral Development for debate. 

Enacting and enabling legislation to support the construction of the approximate 890-mile (1,443-km) crude pipeline is one of the issues agreed upon with project developers in the Host Government Agreement (HGA). Former Ugandan Energy and Mineral Development Minister Mary Kitutu said this can be achieved “by making amendments to some existing laws as well as adding to the existing legislation to ensure the creation of a legal framework that will foster an environment for the lawful implementation of the EACOP Project. 

“The undertaking to put in place the Enabling Legislation for the Project was made by Uganda and Tanzania in the lnter-Governmental Agreement and reaffirmed in the HGAs for the two states,” she said. 

According to Uganda’s Minister for ICT and National Guidance Chris Baryomunsi, who announced the Bill’s approval by Cabinet in October, “the Bill will define the legal and regulatory framework for the ECOP project in Uganda.” 

“The Bill will ensure lawful implementation of the EACOP project and reassure confidence to investors in the government’s commitment to fulfill its obligation under the Host Government Agreement,” he said. 

Moreover, said the minister, the bill will “give Tanzanian government confidence to equally finalize their enabling legislation in a timely manner.” 

The approval of the Bill in Uganda comes nearly six months after Tanzania, Uganda, Total and CNOOC concluded final agreements required to start the project. 

The crude oil pipeline is part of the Lake Albert development, which also includes the Tilenga and Kingfisher upstream oil projects in Uganda. 

According to Uganda’s Minister of State for Mineral Development Sidronious Okasai, “Governments of Tanzania and Uganda granted the project a number of incentives to ensure the pipeline is low cost and the tariffs are fixed, but these incentives can only be put into effect by the enactment of enabling legislation.” 

When constructed and completed, the crude pipeline will transport oil from the Tilenga project, operated by Total, and the Kingfisher project, operated by CNOOC, both fields with an estimated 230,000 bpd at plateau. 

Total, CNOOC and Uganda National Oil Corporation hold a 56.67%, 28.33% and 15% share, respectively, in the two upstream projects. 

The cross-border crude oil pipeline will connect the oilfields in Uganda to the port of Tanga in Tanzania, with Total, UNOC, TPDC and CNOOC as shareholders. 

Total, through Total East Africa Midstream BV, will have a 62% stake, while Uganda National Oil Company and Tanzania Petroleum Development Corporation (TPDC) will each have a 15% share. CNOOC will have an 8% share. 

Under the agreement, Tanzania, through TPDC, has the right to reduce its 15% stake to a minimum of 5% within 30 days after the signature date of the Shareholders Agreement, with CNOOC having the first right to take up whatever share TPDC would have surrendered. 

Total will take up any remaining percentage such that the overall shareholding totals to 100%, according to Kitutu. 

Additionally, the concluded agreements settled on a tariff for the crude oil transported through the pipeline at $12.77 per barrel to be paid by owners of the crude oil, including Uganda. 

Elsewhere, Parliament Watch Uganda, a Parliament monitoring initiative of the Centre for Policy Analysis, said once Uganda enacts the new law it “will provide for the tariff regime applicable to the project during the different phases of operation, including the construction and operation period.” 

“The new bill will also enable Government and the Uganda National Oil Company to pay the transportation tariff in kind, ensure that the project obtains required authorisations in a timely manner as well as grant and protect land rights of the project, including land acquisition.” 

Furthermore, the Bill, when finally passed into law, “will define the local content regime applicable to the EACOP and ensure that Ugandan citizens and enterprises benefit from the project. It will also guarantee third-party access to the pipeline and define the tariff to be paid.” 

Total East Africa said in April the conclusion of the agreements readies “the commencement of the Lake Albert development project.” 

“The main engineering, procurement and construction contracts will be awarded shortly, and construction will start. First oil export is planned in early 2025,” it said. 

“The Tilenga development and EACOP pipeline project are major projects for Total and are consistent with our strategy to focus on low breakeven oil projects while lowering the average carbon intensity of the Group’s upstream portfolio,” added Patrick Pouyanné, chairman and CEO of Total. 

The EACOP project entails burying the 24-inch crude pipeline, thermally insulating it with polyurethane foam (PUF) and installing electrical heat tracing (EHT) along the entire 184 miles (296 km) in Uganda and 713 miles (1,147 km) in Tanzania, making it the longest electrically heated crude oil pipeline in the world. 

A previous project brief said the carbon steel pipeline that has been designed to American Society of Mechanical Engineers standards has varying design pressures ranging from 9.46, 14.97 to 16.7 MPa. 

Furthermore, the pipeline has been designed to ensure the crude oil is maintained above its pour point and, as much as possible, above its wax appearance temperature with the support of the EHT and pump station bulk heaters according to the brief. 

“During pipeline commissioning, the EHT will continuously heat the crude oil to maintain an internal pipeline temperature above 50°C, and at plateau production, pipeline insulation will maintain crude temperature above 50°C without any additional heat supply,” it adds. 

The brief explains that the EHT system will consist of three heat tracing electric cables inserted through three dedicated aluminum channels within the typically 70- to 80-mm-thick PUF insulating material, which is protected by a high-density, polyethylene, extruded covering. 

“The EHT system and bulk heaters will only need to operate for flow conditions lower than the design capacity and, as required, start-up during maintenance or when there may be no flow,” it explains. 

Power for the EHT system will be from three high-voltage electrical power cables that will be buried in a dedicated trench, parallel to the pipeline trench. The electricity will be supplied from the Tilenga Project Central Processing Facility. 

However, as production begins to decline, “the transit time of the oil through the pipeline will increase and thus the crude oil will have more time to cool.” 

“Then, crude oil temperature will be maintained above 50°C using EHT and, potentially later in the project life, bulk heaters,” the brief said. 

Meanwhile, concerns still persist about the likely impact of the crude pipeline on the ecologically sensitive areas through which it will be passing. 

Previously, more than 260 nongovernmental organizations had petitioned chief executives of 25 lending banks to pull out from a financing deal for the project as it threatens water supplies and biodiversity in Eastern Africa. 

However, in April, Total’s CEO assured critics of the project that the oil giant “is also taking into the highest consideration the sensitive environmental context and social stakes of these onshore projects. Our commitment is to implement these projects in an exemplary and fully transparent manner.  

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