Total inks final export pipeline deal need for delayed Uganda oil project

London — Total has signed a final agreement with Uganda and Tanzania on the East African Crude Oil Pipeline project, paving the way for a final investment decision on Uganda's long-delayed, multibillion dollar Lake Albert oil project which is now seen flowing to markets in early 2025.

In a ceremony in the Ugandan city of Entebbe on April 11, Total CEO Patrick Pouyanee, Uganda's President Yoweri Museveni, and Tanzanian President Samia Suluhu Hassan signed deals for the final shareholding, tariff, and transportation of the export pipeline, which is needed to develop Uganda's 1.7 billion-barrel Lake Albert, or Tilgenga, project.

"All the necessary agreements to launch the project are now signed and key engineering, procurement, and construction contracts will be awarded shortly," a spokeswoman for Total said.

Total agreed on the main terms of the oil export pipeline in September after years of delays over the route, tax liability in Uganda, environmental roadblocks, and other terms for the project.

The development of Uganda's 1.7 billion-barrel Lake Albert discoveries relies on the construction of a 1,445 km heated crude export pipeline from Hoima, near the lake, to the Indian Ocean port of Tanga in Tanzania. The pipeline cost is estimated at $3.5 billion. The oil project includes the drilling of over 500 wells to produce 230,000 b/d when fully developed.

Under the deal, Total has a 72% stake in the planned pipeline with China's CNOOC at 8%, Uganda National Oil Company at 15%, and Tanzania holding the remaining 5%.

Total has said the Uganda project has low technical costs and a breakeven of less than $20/b.

Awaiting project finance

Uganda's maiden oil project, the development will tap the Tilenga and Kingfisher fields with most of the crude reaching the international market via shipments from Tanga. Some 60,000 b/d is expected to be supplied to a new oil refinery in Hoima. The 24-inch-diameter line is expected to the world's longest heated pipeline.

Total said it continues to finalize the financing for the pipeline, with some $2.5 billion of the $3.5 billion price expected to come from loans.

"Like some other major projects, financing will be finalized at a later stage," the Total spokeswoman said.

Under the deal signed on April 11, Museveni said Uganda has agreed to a tariff of $13.03/b for transportation of crude through the route.

Total did not say when it expects to take a final investment decision but, in February, CEO Patrick Pouyanne said it is "very close" to formally giving the green light to the project.

Total operates the Tilenga oil project with 56.6%, alongside CNOOC 33.3% and Uganda's National Oil Company with 10%.