The Ugandan government and Total have signed the Host Government Agreement (HGA) for the East Africa Crude Oil Pipeline (EACOP) project.
Uganda has reached a deal with Total that will guide the participation of the national oil company in the crude (oil) export pipeline. The Uganda National Oil Company (UNOC) will hold a 15% stake in the project.
The agreements spells out how UNOC will finance its participation and operation of the over 1,400km Uganda-Tanzania pipeline.
In a September 11 statement issued by Total, the French oil giant said that the decision to allow UNOC to participate in the pipeline project was reached between President Yoweri Museveni and its chairman and chief executive officer, Patrick Pouyanne, at State House Entebbe on Friday.
Speaking shortly after the signing ceremony, President Museveni said Uganda is a very peaceful and attractive investment destination.
He said proceeds from oil will be used to further develop the country’s other important sectors like infrastructure, education and health.
“Our oil will be used to develop our infrastructure, and ICT to enhance durable capacity of our country,”Museveni said.
“I am glad that Total and other companies licenced in the country are taking bold steps to quickly commence the production of petroleum,” President Museveni said.
Museveni reassured the exploration company of government’s support during their work.
“It has taken long, but it was a deliberate move, I can assure you Ugandans,” said the President, adding that Uganda is a rich country with oil as a small fraction of this natural wealth.
He pointed out that other potential lies in Agriculture, Tourism, Services, and Human Resource among others.
The President promised to get in touch with his Tanzanian counterpart, John Pombe Magufuli, to resolve other pending issues, especially concluding the Host Government Agreement in Tanzania.
“I congratulate Total and our Ugandan team on this milestone. We have been slow but steady and sure,” the President said.
Total CEO Pouyanne said this is a great achievement between the Total and the Government of Uganda.
“It was a bumpy road but I am glad we have overcome the challenges. I thank the teams from both sides that have worked tirelessly,” he said.
He commended the Ugandan President for his leadership and promised that the project would be executed successfully.
The Total E&P managing director, Pierre Jessua, said the decision is a major milestone that will lead to the Final Investment Decision (FID) for Uganda’s oil projects in the coming months.
“We now look forward to concluding a similar HGA (Host Government Agreement) with the Government of Tanzania and to completing the tendering process of all major engineering, procurement, and construction contracts,” he added in the statement.
He added that the conditions are “set for the ramp-up of project activities”, and added that land acquisition will resume. This, the statement added, will be undertaken in accordance with the “highest human rights standards”
“Total E&P reiterates its willingness to pursue a constructive dialogue with the communities and NGOs regarding all project activities,” the statement said.
The meeting between Museveni and Pouyanne follows the purchase of Tullow’s final 33.33% stake in Uganda’s oil sector by Total. The deal was announced by the buyer and the seller in April. The purchase has been approved by the seller’s shareholders.
Total purchased the assets for $575m. Total, together with its Chinese partner, Cnooc, had agreed to buy Tullow’s 21.57% for $900m in 2017 to facilitate the long-awaited FID for the oil projects. But the deal collapsed last year after Uganda and the oil companies failed to agree on the tax treatment of the transaction.
Also signed between government and Total in relation to the Uganda National Oil Company was the Deed of Assignment in Relation to the Block 1, 2 and 3A Production Sharing Agreements and the Deed of Novation and Amendment with the Uganda National Oil Company in relation to the Joint Operating Agreement in respect of Exploration Areas 1, 2 and 3A
The East Africa Crude Oil Pipeline will start in Buseruka sub-county, Hoima District, and run for 1,445km to the Tanzania port city of Tanga.
When complete, it will be the world’s longest heated oil pipeline.