Chinese Name: 东非原油管道
Location: Starts in Hoima, Uganda; ends at port of Tanga in Tanzania
Type of Project: Extractive (oil & gas)
Project Developers: Total E&P (62%), Ugandan National Oil Company (15%), Tanzania Petroleum Development Corporation (15%), and CNOOC Limited (subsidiary of China National Offshore Oil Corporation Ltd.) (8%)
Main Contractors: WorleyParsons Europe Limited (UK) as early services Engineering, Procurement and Construction contractor, working with Newplan Engineers and Infra Consulting Services (Uganda) and Norplan and Inter Consult Ltd. (Tanzania)
Known Financiers: Standard Bank (majority owned by ICBC), Industrial and Commercial Bank of China (ICBC), and Sumitomo Mitsui Banking Corporation are acting as advisors and/or lead arrangers for the project loan
Cost: 5 billion USD
Project Status: Planned
Lake Albert is on the border of Uganda and the Democratic Republic of the Congo. It is estimated that the lake basin sits upon 1.7 billion barrels of recoverable oil, and two major international oil companies have proposed to tap this reserve, France’s Total and CNOOC Limited (the Hong Kong-listed subsidiary of China National Offshore Oil Corporation Ltd., CNOOC). Extraction will occur in two oil fields—the Kingfisher field, operated by CNOOC, and the Tilenga field, operated by Total. A portion of the oil will be refined in Uganda, but the vast majority will be transported along a 1,443-kilometre pipeline to the Port of Tanga in Tanzania for export to international markets. The East African Crude Oil Pipeline (EACOP) will carry 216,000 barrels of crude oil per day at peak operation.
The British exploration company Tullow Oil first discovered the reserves in Uganda’s Albertine Graben in 2006. The government of Uganda issued production licenses for the oil fields in 2016, and an inter-governmental agreement between Uganda and Tanzania was signed in May 2017, securing the pipeline route. Tullow, Total, and CNOOC originally each intended to take a one-third stake in the proposed pipeline. Commercial production was expected to begin in 2020 but was postponed due to delays in the sale of the stake in the project held by Tullow, and disagreements between the government of Uganda and the companies around taxation.
In April 2020, Total reached an agreement with Tullow to acquire its interests in the Uganda Lake Albert Project, including the EACOP. In April 2021, a shareholders’ agreement was signed on the project which confirmed the shareholding structure as: Total E&P (62%), Ugandan National Oil Company (15%), Tanzania Petroleum Development Corporation (15%) and CNOOC Ltd. (8%). As of June 2021, the project was projected to cost 5 billion USD, with a debt-to-equity ratio of 60:40 (earlier reports indicated a 3.5 billion USD project cost and a 70:30 equity-finance split). The project is now therefore seeking a project finance loan of 3 billion USD, with the remaining 2 billion USD to be provided by the project’s shareholders.
Three banks are reported to be involved as advisors: Sumitomo Mitsui Banking Corporation of Japan; Stanbic Bank Uganda (a local subsidiary of South Africa’s Standard Bank, which is majority owned by ICBC); and ICBC of China. According to media reports, Stanbic is advising Uganda and Tanzania, Sumitomo Mitsui is advising Total, and ICBC is advising CNOOC. Stanbic and Sumitomo Mitsui are acting as joint lead arrangers for the project loan.
The UK company WorleyParsons was awarded the early services Engineering, Procurement, and Construction Management (EPCM) contract working with Newplan Engineers and Infra Consulting Services from Uganda, together with Norplan Tanzania and Inter Consult Ltd from Tanzania.
After years of delay, the project remains in limbo awaiting the impending Final Investment Decision (FID), which will formalise the shareholding agreements of the project developers. The FID has been continuously pushed back, but the current projected deadline remains within the first quarter of 2021. However, a meeting to finalise the FID was reportedly postponed to April 2021 following the death in office of President Dr John Pombe Magufuli of Tanzania. Financiers, including commercial banks and export credit agencies, have reportedly been approached to consider support of the project, but the project loan has not yet been secured.
The proponents of EACOP have publicised its positive outcomes on the official website of the project, and advertise the pipeline as key to unlocking East Africa’s potential. It is purported that the construction of the pipeline will lead to a substantial rise in foreign direct investment in both countries, enhancing the trade corridor connecting Uganda and Tanzania, and in the process improving the livelihoods of East Africans. It is expected to generate short-term employment during the two to three year construction period. According to the developers, labour will be sourced from local areas, generating business opportunities for sectors of the economy involved in the pipeline design, construction, and operation, and creating a ‘trickle down’ economic effect spurring local development. Service roads will be upgraded along the pipeline route, increasing accessibility of the surrounding areas, facilitating improved movement of goods and people and overall economic exchanges. Permanent jobs created after the pipeline is operational are likely to be in the range of 200–300.
However, the project is expected to have both localised and global impacts on people and the environment. According to calculations based on the specific fuel density of the EACOP oil blend, the emissions from burning the fuel that will travel along the pipeline would be at least 34.3 million metric tons of CO2-equivalent per year at peak production. This is larger than the current annual emissions of Uganda and Tanzania combined, and roughly equivalent to the carbon emissions of Denmark.
In addition to significantly contributing to the climate crisis, the project poses serious risks to protected areas. The pipeline will open Murchison Falls National Park, Uganda’s largest National park and an International Union for Conservation of Nature (IUCN) category II protected area, to commercial oil drilling and extraction. Murchison Falls is a savannah ecosystem that is rich in biodiversity and home to several endangered species of mammals, birds, and plants. The park is also of great importance for the tourism industry in Uganda. A feeder pipeline is expected to pass through the National Park to connect to the main EACOP line. Nearly 2,000 square kilometres of protected wildlife habitats will be impacted by the pipeline itself. The project’s environmental and social impact assessment (ESIA) identifies thirteen species of ‘conservation importance’ within the EACOP’s area of influence, including six that are on the IUCN Red List of Threatened Species. Another feeder pipeline will run through Bugoma Forest to the pump station in Hoima. Bugoma Forest is home to large groups of Eastern chimpanzees and EACOP is likely to severely degrade the chimpanzees’ wildlife corridors. From Hoima, EACOP runs through the Taala Forest Reserve. This potential loss of forest cover is particularly problematic considering Uganda is already losing about 90,000 hectares of forest per year.
In Tanzania, the pipeline will run through the Biharamulo Game Reserve and Wembere Steppe Key Biodiversity Area. Biharamulo Game Reserve hosts a diversity of animals such as lions, buffalo, elands, lesser kudu, impalas, hippos, giraffes, zebras, roan antelopes, sitatungas, sables, aardvarks, and the red colobus monkey. The Wembere steppe is an important place for seasonal birds and an elephant habitat. EACOP also poses a threat to elephant wildlife corridors. Two important Ecologically or Biologically Significant Marine Areas (EBSAs), the Pemba-Shimoni-Kisite site and the Tanga Coelacanth site, are at high risk given the huge amount of oil to be transferred offshore at the Tanga Port. These EBSAs host several Marine Protected Areas (MPAs) as well as Mangrove Forest Reserves, and coral reefs and waters with dugongs and sea turtles.
The project will directly impact several Ramsar Wetlands of International Importance. Oil extraction will take place within the Murchison Falls-Albert Delta Wetland System, a Ramsar site that plays an important role for wildlife in the National Park and is a spawning ground for indigenous fish species. The pipeline will also run near or through a number of Ramsar sites that lie west of Lake Victoria, including Mabamba Bay, the Lake Mburo-Nakivali System, the Lake Nabugabo System, the Nabajjuzi System, and the Sango Bay-Musambwa Island.
The mangroves at the coast of Tanzania which the pipeline puts at risk support approximately 150,000 people, in addition to the ecological services they provide. The 300 permanent jobs the pipeline is expected to create will not compensate for the loss of jobs in agriculture, tourism, and mangroves.
The pipeline poses high risks of freshwater pollution and degradation, particularly to the Lake Victoria basin, which over 400 kilometres of the pipeline will traverse. More than 40 million people depend on Lake Victoria for water and food production. The pipeline also crosses several rivers and streams that flow into the lake, including the Kagera River. The probability of a pipeline oil spill is high, particularly given that about a third of the pipeline is located in the Lake Victoria watershed, an active seismic area. There are already several accounts of oil spills or seepages from other oil extraction projects in the Albertine Graben region, including one at the Kiboro hot springs in 2020.
A study by Oxfam found that community members had limited opportunity to participate in the environmental and social impact assessment (ESIA) for the project in both countries. Consultation periods for the ESIAs were just 14 days in Tanzania and 28 days in Uganda. Although public hearings and meetings were held, community members reported that they did not receive detailed enough information on the environmental and social impacts of the project to be able to engage in meaningful public consultation. The Netherlands Commission for Environmental Assessment reviewed the project’s environmental and social impact assessment’s review of the Ugandan portion of the pipeline and found that the negative impacts on water and wetland crossings were inadequately addressed.
The pipeline route also traverses a number of heavily populated districts in both Uganda and Tanzania, and large-scale land acquisition and resettlement is expected as a result of pipeline construction and associated oil extraction and infrastructure, on both a temporary and permanent basis. 5,300 hectares of land will be needed for construction and operation of the pipeline, and around 14,000 households will lose land.
The project has already caused displacement of local communities, some of which have been stopped from growing perennial crops from which they make a living. These people have been told they must wait for the project’s Final Investment Decision before they receive compensation. Affected people reported that the land valuation and compensation process was beset with problems, stating that they had basic understanding of the stakeholder engagement process and felt pressured into signing valuation forms, sometimes with important information written in pencil, which they were subsequently not given copies of.
Human rights defenders, environmental activists, and journalists who have criticised the project and associated facilities have faced harassment, intimidation, retaliation, or threats. In September 2020, for example, nine Ugandan environmental and human rights defenders were arbitrarily arrested and detained by the authorities for challenging oil development in the country among other sectors causing deforestation and harm to biodiversity. The security and human rights risks surrounding the oil project(s) have attracted scrutiny from UN Special Rapporteurs on human rights.
In May 2019, a group of 30 local and international civil society groups wrote to the banks linked to the project, raising concerns about project risks and its lack of compliance with national laws, international human rights standards, and the Equator Principles (which Standard and Sumitomo have signed on to). In March 2020, over 100 civil society organisations wrote to the president of the African Development Bank (AfDB), urging the bank not to consider a request from Uganda and Tanzania to provide financing for the project. The AfDB responded saying that it would not fund the project as it did not fall within its focus area of renewable energy projects.
By September 2020, over one million people had signed a petition calling on Total to stop drilling in national parks and cancel the pipeline. A similar petition to Sumitomo and Standard gathered almost 25,000 signatures. Local groups in Tanzania and Uganda have directly lobbied their governments raising their concerns about the project and seeking dialogue. The Total-led Tilenga oil development project and EACOP are subject to multiple ongoing legal challenges in Ugandan courts, French courts (as the first case brought under the new French Duty of Vigilance Law), and the East African Court of Justice.
In March 2021, an open letter signed by over 260 local and international civil society groups was sent to the banks linked to the project as well as other banks that may be considering it, urging them not to finance the project. Following this, Standard Bank told the media it had hired an independent environmental and social advisor to help assess its involvement in the project. Later in October 2021, over 60 civil society groups from Uganda, Tanzania, the Democratic Republic of the Congo, and Kenya wrote an open letter to ICBC, expressing their concerns about the bank’s role as a financial advisor and its potential participation in providing future project financing, and calling on ICBC to instead focus on supporting green and low-carbon energy projects in the region.
As of early-2022, the United Kingdom’s export credit agency, UK Export Finance, has ruled out financing the project, as have commercial banks Barclays, Credit Suisse, ANZ, BNP Paribas, Crédit Agricole, Société Générale, UniCredit, United Overseas Bank, Royal Bank of Canada, HSBC, and Mizuho. The global insurance companies Zurich, AXA, and Swiss Re have also ruled out insuring the project. Despite the strong opposition, the project remains a priority for Total, CNOOC, and the governments of Uganda and Tanzania.
5 January 2022: Updated to include information on an open letter sent by African civil society groups to ICBC in October 2022; updated the number of banks and insurance companies that have ruled out financing/insuring the project.
11 October 2021: Updated to include the latest BankTrack report in the Key Sources.
31 July 2021: Updated to include the Stockholm Environment Institute/Institute for Governance & Sustainable Development’s interactive map.
3 July 2021: Updated to reflect change in reported breakdown of shareholding, as well as the revised project cost and equity-finance breakdown. The list of banks that have stated they will not finance the project was also updated.