Regional Barriers Put Total, CNOOC’s Uganda Oil Project At Standstill

Regional Barriers Put Total, CNOOC’s Uganda Oil Project At Standstill an accessible web community

By Spy Uganda

TotalEnergies, formerly known as Total, plans to take a final investment decision (FID) on Uganda’s 230,000 b/d Lake Albert oil project this month, despite coming under pressure to justify another giant greenfield oil development in its energy transition strategy and in the face of environmental opposition and growing insecurity in the neighbouring Democratic Republic of Congo (DRC).

At least 55 people were killed in attacks on 31 May that targeted camps for internally displaced people near the DRC villages of Boga, in Ituri province, and Tchabi, in North Kivu province, the UN says. The villages are located around 150km from Lake Albert, where TotalEnergies is developing its 190,000 b/d Tilenga oil field. The attacks are blamed on the Allied Democratic Forces, an Islamist militant group fighting to overthrow Ugandan president Yoweri Museveni. More than 1,200 civilians have been killed in the insurgency and over 2mn people have been displaced since 2017, according to the UN.

DRC president Felix Tshisekedi declared a month-long state of emergency in the country’s eastern region in May. The governments of DRC and Uganda have agreed to fight the insurgents jointly. Kampala has deployed over 2,000 troops inside the DRC to further strengthen security, and plans to raise this to 2,500. This is partly to ensure that the $20bn Lake Albert development does not suffer the same fate as TotalEnergies’ 13.1mn t/yr LNG project in Mozambique, where Islamist attacks prompted the company to declare force majeure on the $30bn scheme in April.

The DRC government last month suspended the civilian administrations of North Kivu and Ituri provinces following the escalation in insurgent attacks, and enforced martial law. Its intervention has given TotalEnergies more confidence to go ahead with the Tilenga and 40,000 b/d Kingfisher projects. With no threat seen to its workers, FIDs for the upstream projects and associated infrastructure are still on track to be taken before the end of June, the firm says.

TotalEnergies and China’s state-owned CNOOC are joint-venture partners in the project, which will include a 1,445km crude export pipeline from Hoima in the Lake Albert region to Tanga port on Tanzania’s Indian Ocean coast. More than 260 civil society organisations from around the world have called on banks not to fund the East African Crude Oil Pipeline (EACOP) because of ecological and humanitarian risks. The Tilenga development lies within the Murchison Falls National Park, home to endangered species such as chimpanzees.

Don’t Bank On It

The EACOP consortium plans to source around $2.5bn of the $3.5bn cost of building the pipeline from banks. Some banks have indicated that they will not finance the project, but the African Development Bank is among those willing to do so. The IMF has also agreed to lend the country $900mn, of which $480mn is intended for Uganda’s equity stake in the pipeline.

TotalEnergies chief executive Patrick Pouyanne last month tried to appease shareholders’ concerns over the project’s potential environmental harm by saying that the firm will do everything possible to ensure that its impact is minimised. And he defended the role of Ugandan crude within the company’s energy portfolio, citing projected production costs of around $11/bl and CO2 emissions of 13 kg/bl, well below TotalEnergies’ current averages of $20/bl and 20 kg/bl, respectively.

TotalEnergies holds a 56.67pc stake in the upstream portion of the Lake Albert project, CNOOC 28.33pc and Ugandan state-owned UNOC 15pc. Production is expected to start up in 2025, with 216,000 b/d carried through the EACOP for export and the rest to be supplied to the planned 60,000 b/d Albertine Graben refinery, to be launched in 2024 at Hoima. an accessible web community

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