French supermajor Total has finalised an agreement with the government of Uganda to pave the way for a final investment decision by the end of this year for a key pipeline to serve planned huge oilfield developments in the land-locked East African nation.

The deal with the Kampala administration covers construction of the the East Africa Crude Oil Pipeline (EACOP), designed to produce 230,000 barrels per day from the Albertine Graben once the long-delayed project is finally up and running.

President Yoweri Museveni and Total chief executive Patrick Pouyanne, who flew into the Ugandan capital on Friday, signed the Host Government Agreement (HGA) to enable the $3.5 billion project to proceed, and for construction to commence early next year.

The protocol was signed by Uganda’s Minister for Energy & Minerals Development Mary-Gorett Kitutu and Total E&P president Nicolas Terraz.

Uganda expects sanction of the Albertine Graben development — including the EACOP pipelay project — to herald some $20 billion-worth of investment in Uganda, according to Kitutu.

Issues understood to have been resolved last weekend include participation in the EACOP of the Uganda National Oil Company (UNOC) as well as “governance issues” related to the accrual of benefits and bloc management.

Also signed during the ceremony was a deed of assignment for the production sharing agreement for Block-1 and for production licences for Exploration Areas-1, 2 & 3A, and a deed of novation and amendment with the UNOC for the joint operating agreement governing Exploration Areas-1, 2 & 3A.

Museveni also undertook to help his Tanzanian counterpart President John Magafuli to resolve pending issues to enable signature of a parallel HGA with Tanzania, signed yesterday in the northwest Tanzanian town of Chato — with Museveni in attendance.

Some 80% of the proposed length of EACOP will run through Tanzania, but Magafuli’s government spokesman Hassan Abassi declined to announce a date when construction might commence.

Concluding the Tanzanian HGA will help speed “the tendering process for all major engineering, procurement and construction contracts” according to Total E&P Uganda manager, Pierre Jessua.

The 1445-kilometre heated pipeline will run from Buseruka County in Hoima District on the shores of Lake Albert to Tanga port on Tanzania’s Indian Ocean coast.

The environmental and social impact of the project been subject to intense scrutiny and criticism by local and foreign non-governmental organisations.

Total has insisted it would look again at recommendations made by Oxfam International as they were “complementary to (the major’s own) engagement and consultation with affected communities.. and would be taken as a basis to progress."

This would especially be so in the area of land acquisition and communication, according to a statement issued by Total.

Uganda declared the discovery of commercial oil reserves in 2006, reporting in excess of 6.5 billion barrels of oil in place, some 1.7 billion of which is believed by partners Total, Tullow Oil and the China National Offshore Oil corporation (CNOOC) as recoverable.

Tullow has agreed to sell its entire holding to Total.

Uganda and Tanzania are also understood to have agreed a profit sharing formula based on the length of the pipeline proposed to run through Tanzanian territory.

Politics

Total signs deal paving way for East Africa oil pipeline to kick off