Uganda to pay increased oil shipping tariff

In a bid to boost its crude oil exports, the government of Uganda announced last week that it will pay a higher tariff to use the pipeline planned to run through neighboring Tanzania.

Spanning 1,445km, the Uganda-Tanzania Crude Oil Pipeline is intended to transport crude oil from Uganda’s oil fields to the Port of Tanga, Tanzania on the Indian Ocean.

The government of Uganda was initially set to pay a tariff of $12.20 per barrel of crude shipped through the pipeline. However, following negotiations with investors, including French oil giant Total, the government has agreed to increase the tariff to $12.77 per barrel.

The Uganda fields are jointly owned by Total, China’s CNOOC and U.K.-based Tullow Oil. At a cost of $3.5 billion, approximately two-thirds of the project’s cost will be debt-financed jointly by a Ugandan unit of Standard Bank Group and Japan’s Sumitomo Mitsui Banking Corp.

Over a decade ago, Uganda discovered crude reserves near its border with the Democratic Republic of Congo, estimated at 6 billion barrels. Commercialization of the oil has been repeatedly stalled due to the lack of an export pipeline and related infrastructure but is now expected to be completed in 2022.

The production of commercial quantities of oil in the region carries the potential to transform Uganda into a key player in Africa’s oil industry, which is currently dominated by West and Central African players Nigeria and Angola.

Africa Oil & Power returns to London for the second year, to host the AOP Investor Forum 2019. The one-day conference will be held on June 17, 2019 at the Royal Institute of British Architects.

Registration is now open.