Ugandan MPs approve EACOP Special Provisions Bill 2021

Uganda moved one step closer towards launching commercial hydrocarbon production last week, when members of Parliament voted to approve a bill designed to facilitate construction of the East African Crude Oil Pipeline (EACOP).

Legislators debated all sections of the draft law, known as the EACOP Special Provisions Bill 2021, on December 8. They then scheduled the vote for December 9 after reaching agreement on all clauses. Now that the vote has taken place, Parliament can send the bill to President Yoweri Museveni for signature.

As of press time, Museveni had not said when he expected to finalise the legislation.

The EACOP Special Provisions Bill 2021 aims to enable and operationalise certain provisions of the Inter-Governmental Agreement (IGA) signed between Uganda and Tanzania earlier this year, as well as the Host Government Agreement (HGA) signed between Uganda and the EACOP group.

It will allow the French-led consortium to meet certain preconditions for beginning construction by filling gaps in Uganda’s existing legal regime that do not make adequate provision for or are not consistent with the pipeline scheme. Additionally, it will support the Ugandan government’s plan to ensure that EACOP’s transport tariffs remain fixed over the lifespan of the project.

The new law will not completely supplant Uganda’s existing legal regime, local press sources noted last week. They pointed out that EACOP would also be subject to the country’s petroleum, environment, immigration, insurance, land and tax laws.

Even so, once Museveni signs the bill, Uganda will be able to join Tanzania, which passed similar enabling and operationalising legislation in August 2021, in laying a foundation for the construction of the EACOP pipeline. The project is seen as crucial to development of oilfields in western Uganda near Lake Albert, as it will establish an export route for that production stream.

According to previous reports, the EACOP pipeline will be built by a consortium in which TotalEnergies (France) is serving as the operator with a 62% stake. The remaining equity will be divided between China National Offshore Oil Corp. (CNOOC), with 8%; Uganda National Oil Co. (UNOC), with 15%, and Tanzania Petroleum Development Corp. (TPDC), with 15%.

Both TotalEnergies and CNOOC are involved in developing the oilfields that will provide throughput for the pipeline; the former company serves as operator of Tilenga, while the latter is leading work at Kingfisher.

The EACOP pipeline will follow a 1,445-km route from Hoima, a town in western Uganda, to Tanga, a port on Tanzania’s coast. It will handle 216,000 barrels per day (bpd) of oil from Blocks 1, 1A, 2 and 3A in western Uganda, which are home to the Kingfisher and Tilenga fields. These fields are due to begin production in 2025 and will eventually yield at least 260,000 bpd of crude.