Tanzania and Uganda strike profit-sharing oil pipeline agreement
Dar es Salaam — Tanzanian President John Magufuli said he had agreed with his Ugandan counterpart on the sharing of profit from a jointly planned $3.5bn crude-export pipeline.
“We have agreed that Tanzania will take 60% of the profits and Uganda will remain with 40%,” Magufuli said in a televised event on Sunday from his hometown of Chato after a meeting with Ugandan President Yoweri Museveni.
The accord is yet another milestone that, alongside agreements between the governments and companies led by Total, bring closer a final investment decision for the project.
The share arrangement is partly based on Tanzania’s role in building and operating 1,115km of the conduit, according to Magufuli. Uganda will be responsible for the 330km section in its territory.
Total is leading plans to build the conduit from Uganda’s oilfields in the west of the country to the Tanzanian port of Tanga along with partner Cnooc of China and the two governments. Uganda, which discovered commercially viable crude deposits in 2006, has an estimated 6-billion barrels of oil resources and plans to start pumping crude from the ground in 2023/2024.
Museveni and Magufuli are moving to make up for lost time in developing the pipeline, after Tullow Oil in April agreed to sell its Ugandan assets to Total. The sale had been delayed partly by tax disagreements with Ugandan authorities.
The two leaders agreed “that the remaining agreements be fast-tracked” including the Tanzanian host government agreement, Museveni said later on Twitter.
On Saturday, Total chair and CEO Patrick Pouyanne met Museveni and agreed on issues regarding the host government. Concluding a similar accord with Tanzania, whose territory the pipe will traverse, allows the French major to complete the tendering for all engineering, as well as procurement and construction contracts.
“The total investment of building just the infrastructure of the project in both Uganda and Tanzania will exceed $16bn during the lifetime of the project,” Museveni said. “This doesn’t include what we will earn.”
Tanzania’s national oil company said in June it expects a final investment decision for the pipeline in December.
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