Uganda’s energy minister and her Tanzanian counterpart revealed Friday that they have referred “contentious” clauses in the document that spells out the rights and obligations of the parties in proposed oil pipeline to their respective heads of state before a final agreement between all parties is reached.
Uganda, Tanzania, and the oil companies should have signed the host government agreement by now, but sources familiar with the negotiations tell this website a conclusion is far from reach.
Irene Muloni, Uganda’s energy minister, told journalists on Friday night at the closing of an inter-ministerial committee on the pipeline negotiations that there has been some intense haggling over the agreement, which explains the delays.
Some of the contentious clauses regard matters of arbitration, concessions, and taxes whose details are still being negotiated.
Teams from the two countries drawn from their lands, justice, energy, and finance ministries have been meeting in Kampala since Monday to harmonise clauses in the agreement. Officials described the negotiations as the “last leg” of discussions.
Once Uganda and Tanzania sign the agreement, the joint venture partners—Total E&P, Cnooc, and Tullow Oil—are also expected to sign, most likely later this year.
Signing the agreement is a precursor to other key agreements like the project financing agreement, the shareholders agreement, the transportation agreement, and the establishment of a pipeline company.
Additionally, the host sharing agreement should be signed before a final investment decision on the East African Crude Oil Pipeline is made.
Ms Muloni and Medard Kalemani, Tanzania’s minister of energy, said the agreement is most likely to be signed before June.
The ministers said conclusion of all agreements will lead to the engineering, procurement and construction stage of the pipeline, which they said is likely to happen in mid-2020. Construction of the pipeline is expected to take a total of 36 months.
Officially, Uganda is looking at 2021 or thereabouts to start commercial oil production. But industry sources say that date is wildly optimistic and expect production to start in 2023 or 2024.