East African Crude Oil Pipeline (Eacop) project finance appears to have been taken over by the Chinese as major financiers buckle under pressure from environmental opponents to abandon it.
A week ago, protesters claimed that the project may produce seven times as much carbon emissions annually as the rest of the nation, prompting Standard Chartered Bank to withdraw its $5 billion offer. According to a Stanchart representative, the lender “isn’t involved in the financing” of the 1,443 km crude pipeline that runs from Tanzania’s coast along the Indian Ocean to the oilfields in western Uganda.
TotalEnergies, a major investor in Uganda’s oil projects, is consequently working against the clock to complete land acquisition and financial closing for the pipeline without losing sight of the 2025 oil production and export deadlines.
Although the rigs are operational and upstream field development is moving forward, Eacop is falling behind the government’s schedule for the start of oil production in 2025 because of difficulties with land acquisition and a postponed financial close after many risk-averse banks targeted as financiers withdrew from the project.
But the French energy juggernaut has a contract with China Petroleum Pipeline Engineering (CPP) for the building and provision of line pipe; this shifts the transnational project to Beijing, where the majority of the loans are anticipated to come from.
The state-owned China National Offshore Oil Corporation (CNOOC), which holds a 28.33 percent share in the Ugandan oil and 8% of Eacop, and CPP are both state-owned companies. CPP is a subsidiary of CNPC.
John Bosco Habumugisha, the deputy managing director of Eacop, stated last month that the governments had made considerable progress in securing 60% of the funding needed for the project, which is anticipated to spur significant economic activity throughout the 1,443 km-long corridors.
Patrick Pouyanné, CEO of TotalEnergies, stated to shareholders last year that $2 billion to $3 billion in debt will be needed for Eacop.
Oil from the Tilenga and Kingfisher oilfields in the Lake Albert basin will be transported by Eacop to Tanga Port on Tanzania’s coast at a rate of 216,000 barrels per day.
The project’s land acquisition, contract award, detailed engineering, procurement, construction, and commissioning, including hydro-testing, are anticipated to take place between 2022 and 2025. After that, first oil from upstream facilities is anticipated. However, a specific date for when the contractors will be given the all-clear to begin building in May is not yet known.
In Tanzania and Uganda, respectively, 98 and 76 percent of signed compensation agreements pertain to land acquisition, whereas 85 and 98 percent of those agreements pertain to compensation payments. Eacop representatives in Kampala are unable to provide an estimated completion date due to project-affected individuals’ failure to provide the necessary documentation.
