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February 1, 2022

Uganda finalises deal with TotalEnergies, CNOOC to develop crude reserves

The announcement follows years of delays as the East African nation seeks to become a major oil producer.

By Scarlett Evans

Uganda is set to announce a much-delayed final investment decision with French major TotalEnergies and the China National Offshore Oil Corporation (CNOOC) today, developing large oil field and pipeline projects in the nation to kickstart its ambition to become a major crude exporter. 

Uganda’s stake in the projects is managed by the state-owned Uganda National Oil Company. 

The L. Albert Oil projects – including the Tilenga and Kingfisher oil fields – are anticipated to reach an output of 230,000 barrels per day, with investment from the oil majors estimated to be over $10bn. 

According to government estimates, around 1.4 billion barrels of recoverable oil is located at the nation’s border with the Democratic Republic of Congo, with Total and CNOOC holding licences to develop the resources. While the reserves were first discovered in 2006, development of the fields has seen repeated delays due to protracted negotiations and disagreements between the government and the oil firms. 

The landlocked nation will see its crude oil exported via pipeline, with the Ugandan Government signing a series of agreements in April and May last year to develop this infrastructure. Dubbed the East Africa Crude Oil Pipeline, the 1,445km pipeline has been labelled the world’s longest heated pipeline, running to a port on the Indian ocean via Tanzania.  

Development of other oil projects in the nation has been confirmed over the last few years, with a US-led group of companies including General Electric, YAATRA Africa, and Italian engineering firm Saipem winning the right to finance, build, and operate a $3.5bn refinery in 2018.  

In June last year, TotalEnergies also announced it had awarded $2bn to a consortium led by the US operator McDermott International and Chinese company Sinopec to develop the onshore Tilenga oil field – estimated to generate up to 200,000 barrels per day.  

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