Tanzania’s government has issued a directory to the East African Crude Oil Pipeline (EACOP) company to accelerate the implementation of community service projects. The company has been asked to allocate sufficient funds for the initiatives. This remarks were issued by the Deputy Permanent Secretary responsible for the Oil and Gas Sector in the Ministry of Energy, Dr James Mataragio. The TotalEnergies led project is expected to carry Ugandan crude to Tanzania’s coast once completed. The rise in cost for the project is significant as it has surged by more than $1.2 billion since the pipeline was sanctioned in early 2022.
Dr Matagio gave the directives during his visit to Mbogwe and Bukombe in Geita Region, where he went to inspect the progress of the project. The 1443-kilometer pipeline will transport up to 216,000 barrels per day of oil from various oilfields across East Africa. These include the TotalEnergies’ multi-field Tilenga asset and CNOOC International’s Kingfisher field on Lake Albert. After this, it will transport the oil to the Tanzanian port of Tanga for transportation. Despite its significance, EACOP has stoked controversy in East Africa and beyond due to factors such as land climate. Furthermore, it has also faced setbacks because of the environmental issues expected from its construction. Opponents have taken their arguments to court amid campaigns to pressure banks and insurers not to finance or insure the project.
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Project Factsheet
Significance:
- Develops the economies of Uganda and Tanzania through increased tax revenues and oil revenues.
- Offers jobs, enhances infrastructure, and promotes national content development.
- Enhances regional integration to the advantage of Kenya, Zambia, and DR Congo
Infrastructure:
- 1,443-kilometer heated pipeline between Hoima (Uganda) and Tanga (Tanzania).
- Transports 216,000 barrels per day from Tilenga and Kingfisher fields.
- Includes pumping stations, storage terminals, and a marine export terminal.
Developer:
- Led by TotalEnergies with partners CNOOC, Uganda, and governments of Tanzania.
- Managed by EACOP Company Ltd. under regional government management.
Funding:
The cost of the project is said to have risen to $5.6 billion, $1.2 billion more than that of the year 2022. It is financed by equity, loans, and banks such as Standard Bank.
Challenges:
- Scolded for posing environmental, climate, and land risks.
- Legal challenges and global activist campaigns are the threat.
- Funding delays due to ESG pressures and stakeholder pushback.
The Significance of the East African Crude Oil Pipeline (EACOP) Once Completed
The significance of the East African Crude Oil Pipeline is one that outweighs the disadvantages, with instant impact being felt. Firstly, it will significantly influence the economies of Uganda and Tanzania by improving both their tax revenues. It will also facilitate creation of job opportunities, national content, and facilitate new infrastructure. Moreover, it will exacerbate the enhancement of a transport corridor between Uganda and Tanzania. The capital investment of $4 billion associated with the construction of the pipeline is one of the largest.
Actually, it is one of the largest ever inward investments into Uganda and Tanzania. From this, Uganda will be enabled to receive more than $20 billion in crude oil revenues from oil wells. Despite the challenges and opposition, the implementation of the pipeline will not only impact both nations, but also neighbors. Countries such as Kenya, Zambia, and DR Congo will also benefit from the impact of the project.
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