Felicity Bradstock
Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK.
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By Felicity Bradstock – Jun 22, 2024, 12:00 PM CDT
- EACOP aims to connect Ugandan oilfields to Tanzania’s port for export.
- The project faced delays due to environmental concerns and funding issues.
- Standard Bank’s $5 billion investment revived the project, but opposition persists.
The development of the East African Crude Oil Pipeline (EACOP) has hit many hurdles since it was initially proposed in 2013. There was great optimism around connecting Uganda with Tanzania to export crude from Uganda’s oilfields via the Port of Tanga, Tanzania on the Indian Ocean, but construction has been stalled due to widespread opposition to the project. Many investors have been forced to pull out, leading many to ask whether the project would ever get off the ground. However, EACOP has recently attracted new funding and TotalEnergies continues to be committed to developing the pipeline.
The development of EACOP is aimed at connecting the Tilenga oilfield – operated by TotalEnergies, and Kingfisher – operated by China National Offshore Oil Corporation (CNOOC), with the Port of Tanga in Tanzania. This would help landlocked Uganda to export its crude supplies internationally. Although oil was discovered in Uganda 17 years ago, oilfield development has been slow as there is currently no easy way to export its crude production. If developed, EACOP would be the longest electrically heated crude oil pipeline in the world, measuring 1,443 km.
Until recently, EACOP had $2 billion in funding from the oil companies developing the project but required a further $3 billion to ensure its completion. Several funders backed out in recent years due to repeated delays and widespread opposition to the project, largely due to environmental reasons. Shareholders of EACOP include TotalEnergies, CNOOC, the Uganda National Oil Company (UNOC), and the Tanzanian Petroleum Development Corporation (TPDC).
Year after year, Total and CNOOC have committed to start construction on the pipeline and yet no building has commenced. This is largely because of investment uncertainties, with many commercial banks, such as JPMorgan Chase and BNP Paribas, having opted out of financing EACOP. Over 20 major insurance companies, such as Aegis, Canopius and Britam, have also said that they will not get involved with the project. This has left the Industrial and Commercial Bank of China (ICBC) and Standard Bank’s Ugandan subsidiary, Stanbic, with the job of looking for new investors to ensure EACOP goes ahead after more than a decade of planning.
This month, South Africa’s Standard Bank announced it would be providing $5 billion in funding for the development of EACOP. This came as a surprise to many considering the long list of banks refusing to get involved in the project after the European Parliament passed a resolution opposing the project in 2022.