(Bloomberg) -- Total SE is poised to go ahead with a $5.1 billion plan to tap more than a billion barrels of Ugandan crude and ship it across east Africa by pipeline.
The project, which could get the green light within days, is a rare example of a frontier oil development at a time when most major companies are cutting spending. It would also cement the French energy giant’s position as the leading player in Africa among major international oil and gas companies, even as the company says it’s making the transition to cleaner energy.
Uganda National Oil Co. said late on Thursday that the final investment decision to build a 1,443-kilometer (897-mile) heated pipeline to transport Uganda’s waxy crude for export at the port of Tanga in Tanzania is expected to be announced on Sunday.
The development of the fields near Lake Albert in Uganda that will feed the pipe is likely to happen at the same time, said a person familiar with the matter, asking not to be named because the information isn’t public.
A spokeswoman for Total declined to comment.
The investment decision would put Uganda on track to become a significant oil exporter for the first time in its history. Yet the economic benefits that the development would bring are being weighed against the potential environmental costs.
Groups that oppose the project, such as Friends of the Earth France, have warned it could pollute the Lake Albert region.Total says it has taken special measures to avoid disruption from oil wells that will located in a small part of the Murchison Falls National Park.
There’s also broader concern that new oil developments run counter to the growing push to transition away from fossil fuels. Total and its peers say they support this effort and will divert spending away from petroleum to renewable energy or batteries.
Yet they are also planning for oil to play a major role in the global energy system for decades to come, and are going ahead with developments that will spew millions of tons of planet-warming carbon dioxide into the atmosphere.
Years of Delay
Companies in Uganda and Tanzania will get an estimated $1.7 billion of work during the construction phase of the whole project, and more to come later, according to Total’s latest annual report.
The French company’s share of the investment in the oil fields and the pipeline is estimated at $5.1 billion, according to the report. Total holds 57% of the oil field licenses and a large stake in the pipeline project. Cnooc Ltd. and Uganda National Oil Co. are also partners, and Tanzania’s national oil company will also hold a stake in the pipeline.
The project will develop the Tilenga and Kingfisher discoveries near Lake Albert. Total expects production to reach a plateau of 230,000 barrels per day.
Uganda first considered the prospect of becoming an oil producer as long ago as 2006, when the first commercial discoveries were made by Tullow Oil Plc. The London-based explorer had hoped to begin exports as early as 2015, but ultimately sold its stake in the fields. Delays have plagued the development, ranging from changing the path of the pipeline to reaching an agreement with the government over tax issues.
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