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Total suspends major pipeline project

Publish date: 09 September 2019
Issue Number: 840
Diary: IBA Legalbrief Africa
Category: General

French firm Total is suspending all work related to the building of the East African Crude Oil Pipeline (EACOP). This after British firm Tullow last week announced a collapse of negotiations for the sale of some of its shares to Total and the Chinese National Offshore Oil Company (CNOOC). Negotiations on the establishment of the EACOP had reached advanced stages, but a failed sale between Tullow Oil and joint venture partners Total and CNOOC caused a setback because Uganda's oil projects are integrated. However, the East African reports that Ugandan Government officials claim it is still possible to salvage the deal and remain within the set timelines for delivery of first oil. ‘It is just a question of aligning a few issues,’ said Peter Mulisa of the Uganda National Oil Company. President Yoweri Museveni on Friday said the project would be implemented as planned. The latest development is expected to affect debt financing for the pipeline amounting to approximately $2.5bn currently being arranged by Stanbic Bank Uganda and Sumitomo Mitsui. The report notes that Tanzania hosts up to 80% of the infrastructure and employs the biggest number of contractors.

Full East African report