Uganda, Tanzania agree on $3.55bn oil pipeline project

Uganda and Tanzania have agreed to construct a $3.55bn oil pipeline boosting oil exports from the region. 

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The governments of Uganda and Tanzania have signed an agreement to build a $3.55bn crude oil pipeline, which will boost oil exports from landlocked Uganda.

The project will take three years to complete and create over 10,000 jobs, according to Irene Muloni, Uganda’s energy minister. The pipeline – which will be 1,445 km-long and 24-inches in diameter – will begin in Uganda’s western region, where crude reserves were discovered in 2006, and end at Tanzania’s Indian Ocean seaport of Tanga.

The pipeline, which will be heated to keep the thick oil liquid enough to flow easily, could be the world’s longest heated pipeline, according to Adewale Fayemi, manager at oil giant Total’s Ugandan subsidiary.

Uganda estimates overall crude reserves at 6.5bn barrels, while recoverable reserves could be between 1.4bn and 1.7bn barrels. French multinational oil and gas giant Total has joint ownership of Uganda’s oilfields, alongside China National Offshore Oil Corporation (CNOOC) and Britain’s Tullow Oil.

It is estimated that Uganda will pay a transit fee to Tanzania of $12.20 per barrel for pumping oil through the pipeline. Kenya had also bid for the pipeline to be built through its country, but Tanzania offered more favourable financial incentives.

 

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