The East African Crude Oil Pipeline Is Under Construction
According to the announced development plan, the East Africa Crude Oil Pipeline will transport crude oil produced in Uganda’s oil fields to the port of Tanga, Tanzania. The project is expected to be officially put into use in 2025, when the energy transmission channel from the inland of East Africa to the Indian Ocean will be opened.
The world’s longest heated oil pipeline
Seamless steel pipe supplier, Nansteel Manufacturing Company Ltd understands that the shareholders of the East Africa crude oil pipeline project include French energy giant Total, Uganda National Oil Company, Tanzania Petroleum Development Company and China National Offshore Oil Corporation (hereinafter referred to as “CNOOC”).
The shareholder agreement and related rates and transportation agreements for the project have been signed. According to Total, the main engineering, procurement and construction contracts for the project will also be signed in the near future, and construction will start as soon as possible.
According to the plan, the East African Crude Oil Pipeline is 1,445 kilometres long and the daily crude oil transportation volume is expected to be 216,000 barrels. Through this pipeline, crude oil produced in Uganda will be directly transported to the Tanzanian Port of Tanga on the coast of the Indian Ocean.
It is worth noting that due to the high viscosity of crude oil produced in Uganda, the East African crude oil pipeline also has a full heating function to improve the fluidity of the crude oil in the pipeline. Therefore, once completed, the East African Crude Oil Pipeline will also become the world’s longest crude oil transportation pipeline with heating function.
At the same time, according to a statement issued by Total, it will cooperate with Uganda National Petroleum Corporation and CNOOC to develop Uganda’s Tilenga and Kingfisher oil and gas projects. The total investment will reach US$5.1 billion.
It is expected to achieve a daily output of 230,000 barrels after stable production. .
Uganda and Tanzania become the biggest winners
In fact, as early as 2006, Uganda had discovered a large amount of crude oil reserves. Data show that Uganda’s total crude oil reserves are as high as 6.5 billion barrels of oil equivalent, of which the total amount of developable crude oil exceeds 2 billion barrels of oil equivalent.
After 15 years, after energy policy changes, asset changes and multiple rounds of negotiations, Uganda, a landlocked country in East Africa, finally reached an oil production agreement with oil and gas developers, and at the same time opened a channel for crude oil exports.
According to data compiled by Bloomberg, the total oil production of the two major oil and gas projects in Uganda, the Tilenga and Kingfisher, is even higher than the combined oil production of the two major OPEC member states, Gabon and Equatorial Guinea. Uganda is also likely to become one of the world’s major oil-producing countries with these two major projects.
The industry generally believes that Uganda, as an economically underdeveloped country, has a per capita annual income of less than US$800 in 2019, and its huge crude oil resources are likely to bring huge wealth to it. Ugandan media “East Africans” wrote an article that although the global oil market is currently in a state of volatility, Uganda still has high expectations for oil exports and hopes to use the development of oil and gas projects to upgrade the country to the ranks of middle-income countries by 2040. .
For Tanzania, on the other end of the East African crude oil pipeline, the country will charge about US$12.7 in “tolls” for each barrel of oil imported from Uganda, and the construction of the crude oil pipeline will also bring a lot of income to the local area. As early as 2017, the then President of Tanzania, John Magufuli, pointed out that the construction of the East Africa crude oil pipeline project will help Uganda and Tanzania achieve a “win-win”, and the development of the two countries will speed up because of this.
Open up the energy channel in East Africa
According to a report previously released by the market research agency Resta Energy, Uganda’s two major oil and gas projects, the Uganda’s Tilenga and Kingfisher, have a total exploitable volume of more than one billion barrels of crude oil equivalent, and the development costs are relatively low.
Among them, the break-even price of the Tilenga oil and gas project is only US$40.35/barrel, while the break-even price of the Kingfisher oil and gas project is about US$48/barrel, which has certain cost advantages compared with Nigeria and other countries, the major oil-producing country in Africa.
For this reason, many industry organisations believe that low crude oil development costs and the investment and construction of oil pipelines are likely to “lever” more capital into the oil and gas development field in East Africa.
Bloomberg quoted Pan Yanlei, Chairman and CEO of Total, as saying that the signing of the East Africa Crude Oil Pipeline and related project agreements is of historic significance for Uganda’s crude oil production and export. “The East African region is likely to attract more than US$10 billion of investment in the future. For Africa, this is one of the largest projects to be developed.”
Reuters also quoted Ugandan President Yoweri Museveni as saying that the East Africa crude oil pipeline project will become a core part of a larger infrastructure construction plan.
If another natural gas transportation pipeline is constructed on the land corridor of the East African Crude Oil Pipeline, it can also transport natural gas from Tanzania and Mozambique to neighbouring countries such as Uganda, Rwanda, and Congo.
Source: OilVoice