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Tanzania

Last fling for fossil fuels in East Africa in $10 billion oil and pipeline project

France's Total and China's CNOOC lead the biggest new oil development in Africa as investors assess options as the great energy transition speeds up

Fifteen years after oil was found in commercial quantities on its western border, Uganda is set to become one of Africa's bigger producers with a target of 230,000 barrels a day, drawing on 6 billion barrels of oil reserves. That is more than either Equatorial Guinea or Gabon.

The deal signed by Uganda, Tanzania, France's Total and state-owned China National Offshore Oil Corporation (CNOOC) last week, worth $3.5 billion, includes a heated pipeline to Tanga port on the Indian Ocean. Total says some $10 billion of investment will be needed on the pipeline.

It was Tanzania's new President Samia Suluhu Hassan's first economic move, although most of the groundwork was already done.

It could be one of Africa's last mega oil projects with the market for exports set to shrink radically in Europe and the United States after 2030. Uganda's key markets will be in Asia and the rest of Africa.

CNOOC, joint lead investor in the project, is a key factor in the East Asian market despite Beijing's latest commitments to a carbon neutral economy. Local campaigners demonstrated against the signing, citing concerns about environmental damage.

Yoweri Museveni sees oil production, which could last for 25 to 30 years, as a driver of growth and modernisation. The pipeline could allow Uganda to be East Africa's main oil supplier, he says, and should see the country reaping revenues from 2024 (AC Vol 61 No 21, Leaders seek poll boost from pipeline deal).

The signing will 'start investment in the construction of infrastructure that will produce and transport the crude oil,' says Robert Kasande, permanent secretary at Uganda's ministry of energy.

For Tanzania, meanwhile, the economic value lies in the fact that around three quarters of the 1,464km pipeline will run through its territory.

 



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