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Home » International Oil Companies » Uganda and Tanzania oil deal sealed

Uganda and Tanzania oil deal sealed

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Presidents Yoweri Museveni and John Pombe Magufuli during the signing of the Oil pipeline deal in Dares Salaam Tanzania over the weekend

Ugandan President Yoweri Museveni and his Tanzanian Counterpart, President John Pombe Magufuli finally over the weekend put pen to paper by signing the East African Crude Oil Pipeline Agreement (EACOP) a move that is expected to pave way for studies to explore the possibility of building a pipeline to the Tanzanian port of Tanga.

The move is expected to cut costs on transportation of crude oil from Uganda’s Hoima oil reserves to Tanga in Tanzania over a distance of 1,443-kilometre with an expectation of transporting 200,000 litres of oil per day once the project starts running in motion.

According to the Uganda’s Permanent Secretary in Ministry of Energy and Mineral Resources, Dr Fred Kabagambe-Kaliisa, who also witnessed the signing to the agreement, the deal with help both parties appraise the merits of a crude export pipeline option through Tanzania with a view to achieving the lowest unit transportation cost for crude oil from Uganda.

“If we get the least cost pipeline to Tanga, then our crude oil will be exported cheaply. We need to carry out due diligence, which requires technical work, to inform our citizens about the end-user tariffs and the memorandum of understanding sets the stage for carrying out detailed evaluation,” Dr Kabagambe-Kaliisa said.

Uganda had previously hoped to enter into agreement with Kenya to develop its crude oil export pipeline, which would have included Hoima-Lacor-Lamu Port, Hoima-Nairobi-Mombasa but however, changed this after comparisons with Tanzania proved cheaper.

President Museveni and also earlier reached an agreement with Kenya’s President Uhuru Kenyatta.

In the new agreement therefore, a team of selected experts will start work on assessing the least cost crude oil pipeline from Hoima to the Tanga Port.

Uganda had also already signed agreements with international oil companies such as Total Exploration and Production Uganda together with the Tanzania Development Corporation (TPDC).

Tanzania’s acting Permanent Secretary of Tanzania’s Ministry of Energy and Minerals, Ngosi Mwihava, says that Dares Salaam this infrastructure will cement regional co-operation.

Oil companies in Uganda have been in discussions with Tanzania for an alternative pipeline route through Tanga despite the recent agreement between Presidents Yoweri Museveni and President Uhuru Kenyatta to build one from Hoima to the Kenyan coast.

Museveni who signed the deal had been in Dares Salaam since Saturday where Magufuli handed over to him the Chairmanship of the East African Community (EAC).

According to a statement issued by Tanzania’s State House, the two leaders signed a communique agreeing to start construction of the East African Crude Oil pipeline (EACOP) project from Hoima in Uganda to Tanga Port in Tanzania.

“The issues of the Hoima-Tanga pipeline are agreed and resolved,”    the statement said, adding that the signing was witnessed by ministers, senior government officials from different institutions which are involved in the project.

A pipeline that is supposed to be built

President Magufuli said the project is important in the development of the two countries and the East African region in general.Museveni said the Tanga Port is strategically located and easy to handle in terms of security matters.

He mentioned that the project is expected to also make fuel cheaper hence fost development of the aviation industry, whereby regional airlines will get cheaper jet fuel.

Museveni said that he was happy to have “concluded all the outstanding issues concerning the oil pipeline agreement …. This project will benefit Uganda and Tanzania. It is one of the strategic ways for the integration of the East African Community and will strengthen our relationship”

The project is also expected to generate employment for between 6,000 to 10,000 people in the two countries.

During the signing, the two presidents also directed their ministers responsible for energy in Uganda and Tanzania to sign the Intergovernmental Agreement (IGA) this Friday, May 27 in Uganda’s capital, Kampala.

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