Total SE has signed agreements with Ugandan officials for an oil development set to transform the East African nation into a significant crude producer and exporter.
The deal, which is expected to unlock upwards of $15 billion in investments, was signed in Kampala. President Yoweri Museveni led the Uganda delegation, while Total chairman and chief executive Patrick Pouyanne led the French company’s team. Tanzania President Samia Suluhu was also in attendance in her first foreign trip as head of state to sign the tripartite agreement on her country’s behalf.
The agreements had been facing multiple delays since the first commercial discoveries of oil were made 15 years ago. China’s biggest offshore oil and gas producer, Cnooc Ltd., and Uganda National Oil Co. are also partners who participated.
The deal will pave the way for constructing the 1440km crude export pipeline from Western Uganda to the Tanzanian Indian Ocean Port of Tanga, a key piece of infrastructure needed to get east African country’s oil into international oil markets.
The pipeline is expected to transport 216,000 barrels of crude oil per day at the peak of production. Tanzania is expected to benefit from the project as it will earn $12.7 off each barrel of oil transported through it.
Additionally, the deal will allow Uganda to move ahead with a project that has been faced with delays for more than a decade since the confirmation of commercial deposits.
According to the Climate Policy Initiative, the country’s oil deposits are estimated to have reduced in value from $61 billion in 2013 to $18 billion in 2018 due to a fall of crude oil prices on the world market, according to the Climate Policy Initiative, a UK-based research firm.
The deal will also benefit the oil companies Total and China National Offshore Oil Corporation (Cnooc) — which have spent years haggling with a reluctant President Museveni, to expedite the crude oil export pipeline instead of his favoured domestic refinery for faster commercialisation of Uganda’s oil.