(Updates with energy minister, more details)
By Elias Biryabarema
KAMPALA May 26 Uganda and Tanzania signed a
framework agreement on their proposed $3.55 billion crude export
pipeline on Friday, a key milestone for the project, which is
expected to start pumping Ugandan oil to international markets
in three years.
An official at Uganda's Ministry of Energy told Reuters the
agreement covered terms on tax incentives for the project,
implementation timelines, the size of the pipeline and local
content levels, keeping it on track to complete in 2020.
Adewale Fayemi, the manager for Uganda at Total,
said the project will become "the longest electrically heated
crude oil pipeline in the world".
"It's a record," he told Reuters, adding it will increase
the flow of foreign direct investment and open a new phase of
economic development in the region when completed.
The 1,445 km-long, 24-inch diameter pipeline will be heated
so it can keep highly viscous crude oil liquid enough to flow.
It will begin in landlocked Uganda's western region, where
crude reserves were discovered in 2006, and terminate at
Tanzania's Indian Ocean seaport of Tanga.
Total is one of the owners of Ugandan oilfields, alongside
China's CNOOC and Britain's Tullow Oil.
Total has said it is willing to fund the pipeline's
construction but has not what stake it will own in the project.
Uganda estimates overall crude reserves at 6.5 billion
barrels, while recoverable reserves are seen at between 1.4
billion and 1.7 billion barrels.
Irene Muloni, Uganda's energy minister, said construction of
pipeline would "facilitate and boost trade in the region" and
create over 10,000 jobs.
The agreement stipulated that Uganda would pay an estimated
transit tariff of $12.20 per barrel for pumping its oil through
the pipeline, she said.
In January, both countries awarded the Front-End Engineering
Design contract for the pipeline to Houston-based Gulf
Tanzania had offered a "fiscal incentives package" that led
Uganda to choose it over Kenya as the favoured host for the
pipeline, Muloni said. She did not describe the incentives.
Kenya had bid to host the same pipeline, which would have
allowed it to earn transit fees and also transport its own crude
in the Lokichar basin in the northwest.
(Reporting by Elias Biryabarema; editing by David Evans)