Total SA has suspended, according to Bloomberg, a US-based online news agency, all planned activities on the $3.5b crude export pipeline.
The pipeline, which stretches from Hoima District in western Uganda to Tanzania, is said to have been suspended after the collapse of a deal in which Tullow Oil Plc had hoped to dispose at least 21.7 per cent of its stake in Uganda to joint venture partners Total E&P and CNOOC.
Bloomberg reported Wednesday, without providing more details that Total E&P had terminated all activities related to the 1,445-kilometer pipeline.
It is not yet clear what impact the suspension will have on various local companies who had invested significantly in anticipation of the huge windfall linked to the USD3.5bn to be spent on the project.
The Uganda–Tanzania Crude Oil Pipeline, also known as the East African Crude Oil Pipeline, had been hoped to be the main transport channel that would move crude oil from Uganda to the Port of Tanga in Tanzania.
The suspension is likely to be a major setback and will further delay oil production, whose production deadline had been pushed to 2023.
Without providing further details, Reuters quoted an industry source who said: “All East African Crude Oil Pipeline activities, including tenders have been suspended until further notice because of the collapse of the [Tullow farm-down deal].”
An email, this website has seen from Total to bidders for the project advises all bidders that the project is now on hold.
“Dear team, be advised that the Package EACOP (East Africa Crude Oil Pipeline)- MLC Main Logistics Contractor has been updated. Project is now on hold as bid activity has been suspended indefinitely by Total,” read the email.
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Details of the suspension are still scanty.
Last week, Tullow Oil was forced to abandon plans to sell a stake in its Ugandan project to joint venture partners – Total E&P and China’s CNOOC. The stake sale was called off at the close of August due to a tax dispute with the government of Uganda.
According to Reuters, the collapse meant uncertainty in terms of who will meet what cost in developing the project that had been built on a similar shareholding structure like that of the oilfields.
However, Arnaud Breuillac, President Exploration & Production of Total in a August 29th statement said that: “Despite the termination of this agreement, Total together with its partners CNOOC and Tullow will continue to focus all its efforts on progressing the development of the Lake Albert oil resources.”
Arnaud Breuillac, President Exploration & Production of Total
“The project is technically mature and we are committed to continuing to work with the Government of Uganda to address the key outstanding issues required to reach an investment decision,” he said, adding however that, “a stable and suitable legal and fiscal framework remains a critical requirement for investors.”
Reports indicate that key employees, who had been hired to work on the pipeline, have already been laid off.
However, this news website could not confirm the claim.
