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The future of the pipeline depends on Beijing

After Standard Chartered Bank drops out of the pipeline financing consortium, China now has the casting vote

The future of the US$5 billion East African Crude Oil Pipeline looks increasingly dependent on China after Standard Chartered bank became the latest institution to walk away from financing the 1,443 kilometre pipeline that seeks to connect Uganda's oil fields near Lake Albert to Tanzania's Tanga Port.

At the beginning of May, the British bank confirmed that it was 'not involved in the financing' of Eacop amid pressure from environmental and human rights activists (Dispatches 24/5/22, Campaigners disrupt East African pipeline plan). Standard Chartered gave no reason for abandoning the project.

French fossil fuels giant TotalEnergies, which has a 62% stake in the project, has rushed to plug the gap, signing a deal with China Petroleum Pipeline Engineering (CPP) for the construction and supply of line pipe, CPP has taken over the management of the coating plant for the pipes and fittings. And the China Petroleum Engineering and Construction Company has inked a deal with TotalEnergies for the build-up of ground facilities at the Tilenga oilfield.

In 2022, the European Parliament gave its backing to the activists, calling for 'an end to the extractive activities in protected and sensitive ecosystems, including the shores of Lake Albert', and for 'maximum pressure' to be exerted on the project backers (Dispatches, 28/9/22, African leaders warn on climate talks failure at UN General Assembly).

The result is an increasing role for Chinese financing. Last November, Tanzanian President Samia Suluhu Hassan used a trip to China to lobby for additional funding (AC Vol 63 No 22, Dash to oil depends on China).

Government officials in Kampala and Arusha maintain that the project is still on track to start pumping oil by 2025. In April, Eacop deputy managing director John Bosco Habumugisha said that 60% of the finance had already been raised.

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