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Host agreement for oil pipeline set for May

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Negotiations between the Uganda government, Total E&P, Cnooc and Tullow Oil over the Host Agreement for the East African crude oil pipeline are expected to be concluded in May, says the Deep Earth International’s monthly report, for April 2018.

The report says officials from both sides were locked up in closed-door meetings in late April at Serena hotel trying to thresh out the finer details of an agreement, which will spell out the commitments needed to have the pipeline constructed with less risks.

The same negotiations, which started in February this year, are happening in Tanzania too.

According to the report, the host agreement stipulates the obligations of both the governments and the oil companies in regards to issues such as access to land, local content, financial obligations, and the raising of debt for the project. It is not yet clear what concessions both parties have agreed to.

“The Host Agreement must be in place before the companies can shore up debt for the crude oil pipeline. A final investment decision for the pipeline is expected to be concluded in the third quarter of this year,” the report says.

The Uganda negotiation team is being led by officials from the Uganda National Oil Company, with support coming from the Petroleum Authority of Uganda and the Directorate of Petroleum.

Uganda and Tanzania have selected Gulf Interstate Engineering, a Houston-based company, to design a 1,445 km crude oil pipeline from the heavy oil fields of western Uganda near Hoima to Tanzania’s Indian Ocean seaport of Tanga.

Among the many tasks, the firm’s contract involves helping with “project construction specifications,” a plan for project execution, the implementation schedule and writing bid documents for a process to select a contractor to develop the pipeline.

Uganda estimates overall crude reserves at 6.5 billion barrels, while recoverable reserves are seen at between 1.4 billion and 1.7 billion barrels.

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