French oil major Total E&P, the lead joint venture partner on the proposed East African Crude Oil Pipeline (EACOP), is “concerned” over the “slow progress” on the project, particularly from Uganda government officials in the Petroleum Authority and the energy ministry.
Sources familiar with behind-the-scenes deliberations on the matter told this website that Total E&P is specifically concerned about the stalling of one of the key project frameworks, the Host Government Agreement (HGA) between the Ugandan and Tanzanian governments, which ought to have been signed early this year, at the very latest.
They added that even Tanzanian government are “not quite happy” with the Ugandan side. The source said Uganda ministry of energy officials have been “shuffling back and forth reviewing the draft agreements” and have taken too long to reach a decision.
Officials from Uganda and Tanzania met early this month to agree on some of the pending issues, and set the end of June as the deadline for signing the agreement. But this is “unlikely,” our sources told us.
The Host Government Agreement details the terms of rights of the pipeline holding company (PipeCo), transfer of money, and acceptance to international arbitration, among other terms.
Last May, Uganda and Tanzania signed an Intergovernmental Agreement binding the two governments on the project. The agreement also indicated that the HGA would be signed by the end of the year.
Tanzanian officials, including President John Magufuli, have previously expressed frustration at delays on the project.
The 1,147km pipeline is expected to run from Hoima in mid-western Uganda to Tanga Port in Tanzania. It is projected to cost $3.5bn.
At least 80% of the pipeline, 1,147km, will be on the Tanzanian side and 80% of the projected capital expenditure ($3.5bn) will be spent there.
The two countries’ equity in the project will be carried through the Tanzania Petroleum Development Corporation and the Uganda National Pipeline Company, respectively. NPC is one of the two subsidiaries of the Uganda National Oil Company.
The project’s Front End Engineering Designs were concluded late last year, and were supposed to be reviewed by all sides before a final investment decision is made. No date has been given for the final investment decision.