Tanzania, Uganda Agree Profit Sharing for Planned Crude Pipeline

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Tanzanian President John Magufuli said he agreed with his Ugandan counterpart on the sharing of profit from a jointly-planned $3.5 billion crude-export pipeline.

“We have agreed that Tanzania will take 60% of the profits and Uganda will remain with 40%,” Magufuli said in a televised event on Sunday from his hometown of Chato after a meeting with Ugandan President Yoweri Museveni.

The accord is yet another milestone that, alongside agreements between the governments and companies led byTotal SA, bring closer a final investment decision for the project.

The share arrangement is partly based on Tanzania’s role in building and operating 1,115 kilometers (693 miles) of the conduit, according to Magufuli. Uganda will be responsible for the 330 kilometer-section in its territory.

Total is leading plans to build the conduit from Uganda’s oil fields in the west of the country to the Tanzanian port of Tanga along with partnerCnooc Ltd. of China and the two governments. Uganda, which discovered commercially viable crude deposits in 2006, has an estimated 6 billion barrels of oil resources and plans to start pumping crude from the ground in 2023-24.

Museveni and Magufuli are moving to make up for lost time in developing the pipeline, afterTullow Oil Plc in April agreed to sell its Ugandan assets to Total. The sale had been delayed partly by tax disagreements with Ugandan authorities.

More:
  • Total, Uganda Agree on Crude Pipe Issues to Pave Spending
  • Uganda’s Planned Pipeline Threatens Communities, Oxfam Says
  • Uganda-Tanzania $3.5 Billion Oil Pipe Decision Seen in December

On Saturday, Total Chairman and Chief Executive Officer, Patrick Pouyanne met with Museveni and agreed on issues regarding the host government. Concluding a similar accord with Tanzania, whose territory the pipe will traverse, allows the French major to complete the tendering for all engineering, as well as procurement and construction contracts.

“The total investment of building just the infrastructure of the project in both Uganda and Tanzania will exceed $16 billion during the lifetime of the project,” Museveni said. “This doesn’t include what we will earn.”

Tanzania’s national oil company said in June it expects a final investment decision for the pipeline in December.

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