Total and its partners in the long-delayed Lake Albert oilfield development in Uganda are closing in on a final investment decision and lucrative engineering, procurement and construction awards after the governments of the land-locked nation and neighbour Tanzania signed key oil deals.
The Kampala and Dodoma administrations signed a trio of key deals that finally clear the way for French supermajor Total and main partner CNOOC International of China to get going on their respective Tilenga and Kingfisher oilfield projects, which will be developed together.
The deals — covering host government and sharing of the huge pipeline to Tanzania's Indian Ocean coast, transportation and tax deals — are significant as they mean Uganda can finally start to unlock oil riches after numerous delays to first production and nearly two decades after the first discovery.
Total said on Monday that a signing ceremony was held in Entebbe, Uganda on Sunday that saw the partners in the Lake Albert development conclude "the final agreements required to launch this major project".
The ceremony was attended by Uganda's President Yoweri Museveni, Tanzania's new President Samia Suluhu Hassan, Total chief executive Patrick Pouyanne and representatives from CNOOC International and state-owned project stakeholders Uganda National Oil Company (UNOC) and Tanzania Petroleum Development Corporation (TPDC).
"These agreements open the way for the commencement of the Lake Albert development project," Total said of the trio of agreements, the shareholders agreement of the East Africa Crude Oil Pipeline (EACOP), and the the tariff and transportation agreements between EACOP and the Lake Albert oil shippers.
"The main engineering, procurement and construction contracts will be awarded shortly, and construction will start. First oil export is planned in early 2025," the Paris-based giant added.
Total operates Tilenga and CNOOC International operates the smaller Kingfisher project. Apart from the two fields and the 1443-kilometre, heated EACOP, the scheme also envisages a refinery to be built in Uganda, with a shorter associated pipeline.
Tilenga is the name given to a project located on Block 2 that will tap multiple fields via 31 well pads hosting 425 wells, oil and gas flowlines plus the central processing plant and other facilities.
Tilenga is the most important element of the much larger-scale development that Ugandan government officials said in September will cost $16 billion.
Upstream reported recently that US contractor McDermott International is in pole position to land the engineering, procurement, supply, construction and commissioning contract for the 200,000 bpd Tilenga facility to be built on the Lake Albert shore.
That turnkey contract is thought to be worth around $2 billion.
This transformational scheme also involves the development of the smaller Kingfisher field, with China’s Offshore Oil Engineering Corporation chosen to build its processing plant. Kingfisher will produce some 40,000 bpd.
Total said on Monday the fields together are expected to produce some 230,000 bpd.
The refinery will be built at Kabaale and, along with a 211-kilometre petroleum products pipeline that will terminate near Kampala, is expected to cost up to $4 billion. The refinery will have capacity of some 60,000 bpd.
EACOP also carries an expected price tag of up to $4 billion.
Total has a 56.67% stake in the upstream project, with CNOOC International on 28.33% and UNOC on 15%.
Pouyanne said on Monday: “The Tilenga development and EACOP pipeline project are major projects for Total and are consistent with our strategy to focus on low breakeven oil projects while lowering the average carbon intensity of the group’s upstream portfolio.
"These projects will create significant in-country value for both Uganda and Tanzania.
"Total is also taking into the highest consideration the sensitive environmental context and social stakes of these onshore projects. Our commitment is to implement these projects in an exemplary and fully transparent manner."