Two sticky points that were at the centre of the deadlock currently holding back investors in Uganda’s oil industry from making huge financial investments appear to have been resolved after Patrick Pouyanne, the chairman and chief executive officer of French oil major Total E&P, and President Yoweri Museveni had a closed-door meeting at State House Entebbe on January 18.
The two points are holding back the signing of a $3.5 billion final investment decision for the crude oil pipeline between Uganda and Tanzania. In November 2018, we reported that the three main oil companies in Uganda, led by Total E&P, had asked government to channel all the available oil resources towards the East Africa Crude Oil Pipeline, and delay building the government-preferred oil refinery until the year 2026.
In arguing its case then, Total E&P, which is leading the construction of the crude oil pipeline from Hoima in western Uganda to the Chongoleani peninsula in eastern Tanzania, said that if all the available all resources – the country has about 1 billion barrels of recoverable oil – are not channeled to the pipeline, the tariff they would charge for exporting the crude would go to at least $16 per barrel, higher than the earlier agreed $12.7 per barrel.
These demands appeared to have rattled some government officials, some of whom called for Museveni to come in and offer leadership. But now, The Observer has seen a copy of an internal memo to Total E&P Uganda staff, where Pierre Jessua, the general manager of the company, says the “discussion between Patrick Pouyanne and President Museveni was warm and fruitful and has led to significant progress in view of sanctioning the project [the East Africa Crude Oil Pipeline.]
Jessua’s memo goes on to say: “On the refinery, Total reiterated its commitment to support a 60,000 barrels per day refinery and take a participating interest in the project.”
The memo, which did not specify the exact interest Total would take in the refinery, continued: “On the pipeline project, Total agreed on a fixed tariff of $12.7.” The French company said their target is to sign the final investment decision by June 2019. The final investment decision is expected to spark off huge cash investments into the industry.
These resolutions are an interesting turnaround for a company such as Total E&P, which some experts had thought would be able to get a higher tariff for the crude oil pipeline […]
