Uganda poised to give green light to large oil-export project

The Uganda National Oil Company plans to sign a final investment decision on Feb. 1 for a large oil field and pipeline project, taking a definitive step toward becoming a crude exporter. 

TotalEnergies SE and Cnooc Ltd., along with the East African country’s state oil company, are developing projects expected to reach an output of 230,000 barrels a day—bigger than some OPEC members on the continent. Ugandan President Yoweri Museveni said last year that an agreement was reached with the companies to start production by 2025.

Signing the final investment decision will allow the process to begin of appointing the main contractors for the development, Peter Muliisa, a spokesman for Kampala-based UNOC, said by phone on Friday. Total wasn’t immediately able to respond to a request for comment. 

Commercially viable oil resources were first discovered in Uganda in 2006, but the landlocked country’s path to becoming a crude exporter has faced a number of delays, from changing the route of the planned pipeline to the makeup of the oil companies that are involved. While now poised to break ground, the development still faces opposition from environmental groups that seek to bring an end to the use of fossil fuels, putting some pressure on potential financing sources.    

A range of agreements related to the projects were already completed last year. The international companies will develop the fields and a $4.2 billion heated pipeline to transport the waxy crude 1,443-kilometers (897 miles) to the port of Tanga in Tanzania. Total owns a 62% stake in that project, UNOC and Tanzania Petroleum Development Corp. each have 15%, with Cnooc holding the remainder.

Another final investment decision for a planned 60,000-barrel-a-day refinery led by General Electric Co. is expected by the end of 2022, Muliisa said.