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Uganda and Tanzania signed a framework agreement on their proposed 3.55 billion dollars crude export pipeline on Friday. a key milestone for the project. which is expected to start pumping Ugandan oil to international markets in three years.
An official at Uganda`s Ministry of Energy told Reuters the agreement covered terms on tax incentives for the project. implementation timelines. the size of the pipeline and local content levels. keeping it on track to complete in 2020.
Adewale Fayemi. the manager for Uganda at Total. said the project will become the longest electrically heated crude oil pipeline in the world.
He added that it will increase the flow of foreign direct investment and open a new phase of economic development in the region when completed.
The 1.445 kilometres-long. 24-inch diameter pipelines will be heated so it can keep highly viscous crude oil liquid enough to flow.
It will begin in landlocked Uganda`s western region. where crude reserves were discovered in 2006. and terminate at Tanzania’s Indian Ocean seaport of Tanga.
Total is one of the owners of Ugandan oilfields. alongside China’s CNOOC and Britain`s Tullow Oil. Total has said it is willing to fund the pipeline’s construction but has not what stake it will own in the project.
Uganda estimates overall crude reserves at 6.5 billion barrels. while recoverable reserves are seen at between 1.4billion and 1.7 billion barrels.
Irene Muloni. Uganda`s energy minister. said construction of pipeline would facilitate and boost trade in the region and create over 10 000 jobs.
The agreement stipulated that Uganda would pay an estimated transit tariff of 12.20 dollars per barrel for pumping its oil through the pipeline. she said.
In January. both countries awarded the Front-End Engineering Design contract for the pipeline to Houston-based Gulf Interstate Engineering.
