{"id":8141,"date":"2020-04-29T09:33:15","date_gmt":"2020-04-29T09:33:15","guid":{"rendered":"http:\/\/oilnewskenya.com\/?p=8141"},"modified":"2020-06-08T09:57:11","modified_gmt":"2020-06-08T09:57:11","slug":"east-africas-oil-industry-a-new-story-in-the-making","status":"publish","type":"post","link":"https:\/\/www.oilnewskenya.com\/index.php\/east-africas-oil-industry-a-new-story-in-the-making\/","title":{"rendered":"East Africa\u2019s Oil Industry: A New Story in the Making"},"content":{"rendered":"<p>The recent acquisition by Total of Tullow Oil\u2019s entire interests in the Lake Albert Development Project in Uganda, including the East African Crude Oil Pipeline, marks the beginning of a new chapter for East Africa\u2019s energy industry. To dissect the deal and discuss its wider implications for the region, the African Energy Chamber (<a href=\"http:\/\/www.energychamber.org\/\" target=\"_blank\" rel=\"noopener noreferrer\" data-saferedirecturl=\"https:\/\/www.google.com\/url?q=http:\/\/www.EnergyChamber.org&amp;source=gmail&amp;ust=1588238170544000&amp;usg=AFQjCNFaMBFlrVWAt7cfxN3S4KOtpnKKCw\">www.EnergyChamber.org<\/a>) organised a webinar with leading regional industry experts, held under the Chatham House Rule.<\/p>\n<p>Featuring key officials and representatives from Stanbic Bank, Standard Bank, Shell, Baker Hughes and the Kenya National Oil Company, the webinar was hosted by Eng. Elizabeth Rogo, Founder &amp; CEO of TSAVO Oilfield Services and President of East Africa at the African Energy Chamber.<\/p>\n<p><strong>Good or bad deal?<\/strong><\/p>\n<p>Under the agreement announced last week, the overall consideration paid by Total to Tullow will be $575m, with an initial cash payment of $500m at closing and $75m when the partners take the Final Investment Decision (FID) to launch the project. Under the terms of the deal, Total will acquire all of Tullow\u2019s existing 33.3334% stake in each of the Lake Albert project licenses EA1, EA1A, EA2 and EA3A and the proposed East African Crude Oil Pipeline (EACOP) System. The Lake Albert project, also called the Tilenga Project, has a production capacity of up to 230,000 bopd, which would propel Uganda in the top 5 of sub-Saharan Africa\u2019s oil producers. In addition, the proposed 60,000 bopd refinery and some of the overarching issues were mentioned.<\/p>\n<p>The deal is a win-win for all stakeholders involved. First, for Total, who ends up acquiring Tullow Oil\u2019s entire interests in the Lake Albert development project for less than $2\/barrel. Then, for Tullow Oil, whose debt is rising and who is looking at raising $1bn by selling some of its key assets. The company\u2019s shares rose on the announcement of the deal. Finally, it is a win for Uganda\u2019s oil industry and local jobs. After years of deliberations and debate, the closing of the sale allows the country and oil companies to move the conversation towards FID and practical project\u2019s development. It also sends strong signals to the rest of the region, and Kenya in particular, to do everything possible to unlock their own oil &amp; gas potential.<\/p>\n<p>While visibility on the FID\u2019s timeline remains unclear, the project is very competitive even in a depressed low oil prices environment. The cost per barrel of the Lake Albert Development Project is indeed estimated somewhere between $20 and $25\/barrel. This is explained in part because the country\u2019s hydrocarbons are within shallow deposits which are less drilling intensive and do not need as much casing, tubing and completion work. While Total is following a global trend of drastically cutting expenses in light of the COVID-19 pandemic and the collapse of oil demand and oil prices, the project\u2019s economics make it one of the most likely to get FID in the near future.<\/p>\n<p>A key unanswered question for now is whether CNOOC will exercise its pre-emption rights under the joint operating agreements it has with Tullow Oil and Total as a joint venture partner, like it did in the failed 2019 sale. A scenario under which the Chinese major does exercise once again its pre-emption rights is very likely, and will\u00a0<em>in fine<\/em>\u00a0depend on China\u2019s overall strategy for the wider East Africa region.<\/p>\n<p><strong>Pipeline matters<\/strong><\/p>\n<p>The moving forward of the Lake Albert Development Project, and its export pipeline, is a major step forward de-risking other potential oil &amp; gas projects in East Africa and making them attractive for investments and financing. Given the current industry dynamics, participants agreed that a scenario under which two regional pipelines would be laid was no longer a possibility, and that the East African Crude Oil Pipeline (EACOP) would be the one that was the most likely to be executed.<\/p>\n<p>The EACOP was, however, a matter which participants thought could become contentious for the execution of the overall Lake Albert project, and the development of the region\u2019s oil sector. Key questions remain to be answered, chief amongst them being Tanzania\u2019s business environment and the country\u2019s ability to provide policy certainty on the execution of such a major infrastructure venture. Whether Tanzania decides to stick to an enabling business environment and demonstrate its willingness to comprise with international investors after years of natural resources nationalism remains another unanswered question.<\/p>\n<p>The way the execution of the pipeline evolves will determine a lot of East Africa\u2019s oil industry future. While the original northern route through Kenya was deemed less favourable, a scenario under which Total would consider buying out Tullow Oil\u2019s assets in Kenya, where several significant oil discoveries were made, could potentially re-roll the dice in the region.<\/p>\n<p><strong>Regional content, now<\/strong><\/p>\n<p>Finally, and more importantly, the expected first oil from Uganda in the coming years should urgently lead to local content preparations not on a national, but a regional level.<\/p>\n<p>Between the two upstream projects of Tilenga (Total) and Kingfisher (CNOOC), the pipeline project and the Uganda oil refinery project, the scale of upcoming projects in Uganda and the neighbouring countries represents billions of dollars of opportunities for local companies. However, given the under-developed nature of the local hydrocarbons services industry in East Africa, only regional partnerships and joint-ventures can result in maximising such opportunities. As the conversation in Uganda moves towards employability within local communities and ensuring that Uganda\u2019s oil benefits the development of a strong local sector, the region as a whole needs to come together to support regional ventures. Unless companies across East Africa come together and leverage on their respective expertise and experience to work together, there is a fear that upcoming oil and gas projects will ultimately go to foreign contractors and deprive local businesses from tremendous growth opportunities. In this regard, the development of an African regional content is one of the top 10 measures that form Africa\u2019s Common-sense Energy Agenda, released by the African Energy Chamber earlier this week.<\/p>\n<p>In this context, the need to invest in education, training and skills transfer is greater than ever. The success of the region\u2019s oil sector will depend on all stakeholders coming together to bring the East African energy story to investors and tell it for what it is: a story of opportunity and transformational change for Africans.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The recent acquisition by Total of Tullow Oil\u2019s entire interests in the Lake Albert Development Project in Uganda, including the East African Crude Oil Pipeline, marks the beginning of a &hellip; <a href=\"https:\/\/www.oilnewskenya.com\/index.php\/east-africas-oil-industry-a-new-story-in-the-making\/\" class=\"more-link\">Read More<\/a><\/p>\n","protected":false},"author":24,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[7443,11],"tags":[217,476,6178,686,7384,7414,7412,2297,6336,3178,2466,7413,2533,2571,2603],"class_list":["post-8141","post","type-post","status-publish","format-standard","hentry","category-eastern-africa","category-top-news","tag-baker-hughes","tag-cnooc","tag-eacop","tag-east-african-crude-oil-pipeline","tag-elizabeth-rogo","tag-kingfisher","tag-lake-albert-development-project","tag-shell","tag-stanbic-bank","tag-standard-bank","tag-tanzania","tag-tilenga","tag-total","tag-tullow-oil","tag-uganda","entry"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p5JWkQ-27j","jetpack-related-posts":[{"id":8132,"url":"https:\/\/www.oilnewskenya.com\/index.php\/uganda-underlines-its-intention-to-become-a-major-oil-and-gas-player\/","url_meta":{"origin":8141,"position":0},"title":"Uganda underlines its intention to become a major oil and gas player","author":"","date":"April 24, 2020","format":false,"excerpt":"President Museveni, Tullow Oil and Total\u2019s CEOs could not have chosen a better time to announce their agreement to resolve a long-standing capital gains tax dispute that had earlier prevented Tullow Oil from farming out its Lake Albert licenses to Total. Oil junior Tullow Oil announced that it has agreed\u2026","rel":"","context":"In &quot;Eastern Africa&quot;","block_context":{"text":"Eastern Africa","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/countries\/eastern-africa\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":6205,"url":"https:\/\/www.oilnewskenya.com\/index.php\/stanbic-sumitomo-mitsui-ibc-selected-financial-advisors-east-africa-crude-oil-pipeline\/","url_meta":{"origin":8141,"position":1},"title":"Stanbic, Sumitomo Mitsui, IBC Selected As Financial Advisors For East Africa Crude Oil Pipeline","author":"","date":"August 17, 2017","format":false,"excerpt":"Standard Bank Uganda alongside Japan\u2019s Sumitomo Mitsui Banking Corp. will be tasked with raising $3.55 billion required for the Hoima to Tanga 1,445-kilometer (898-mile) pipeline after they were contracted by Uganda, Tanzania and French Oil giant Total who is also the lead joint venture partner on the crude oil export\u2026","rel":"","context":"In &quot;Top News&quot;","block_context":{"text":"Top News","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/top-news\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2017\/05\/EACOP.jpg?fit=960%2C796&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2017\/05\/EACOP.jpg?fit=960%2C796&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2017\/05\/EACOP.jpg?fit=960%2C796&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2017\/05\/EACOP.jpg?fit=960%2C796&ssl=1&resize=700%2C400 2x"},"classes":[]},{"id":14882,"url":"https:\/\/www.oilnewskenya.com\/index.php\/uganda-tanzania-eacop-announces-the-closing-of-the-first-financing-tranche-for-the-east-african-crude-oil-pipeline-project\/","url_meta":{"origin":8141,"position":2},"title":"UGANDA\/ TANZANIA: EACOP Announces the Closing of the First Financing Tranche for the East African Crude Oil Pipeline Project","author":"","date":"April 1, 2025","format":false,"excerpt":"EACOP Ltd., the company in charge of the construction and future operation of the East African Crude Oil Pipeline project from Kabaale in Uganda to Tanga in Tanzania, is pleased to announce that it has closed thefirst tranche of external financing for the project, provided by a syndicate of financial\u2026","rel":"","context":"In &quot;Countries&quot;","block_context":{"text":"Countries","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/countries\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2024\/01\/EACOP.jpg?fit=1200%2C849&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2024\/01\/EACOP.jpg?fit=1200%2C849&ssl=1&resize=350%2C200 1x, 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regional opportunities associated with the Uganda Lake Albert project, oil and gas exploration, and associated services\u2026","rel":"","context":"In &quot;Eastern Africa&quot;","block_context":{"text":"Eastern Africa","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/countries\/eastern-africa\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2019\/09\/6b6fd289381b596e31f4ca57fd2a04d6.jpg?fit=800%2C535&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2019\/09\/6b6fd289381b596e31f4ca57fd2a04d6.jpg?fit=800%2C535&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2019\/09\/6b6fd289381b596e31f4ca57fd2a04d6.jpg?fit=800%2C535&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2019\/09\/6b6fd289381b596e31f4ca57fd2a04d6.jpg?fit=800%2C535&ssl=1&resize=700%2C400 2x"},"classes":[]},{"id":10197,"url":"https:\/\/www.oilnewskenya.com\/index.php\/east-africa-total-to-reach-albertine-basin-fid-next-week\/","url_meta":{"origin":8141,"position":4},"title":"East Africa: Total to Reach Albertine Basin FID Next Week","author":"","date":"April 9, 2021","format":false,"excerpt":"French major Total is said to be\u00a0 ready to announce the albertine basin final investment decision this Sunday according to a source not named by Bloomberg. Citing an unnamed source in the Uganda National Oil Company (UNOC) Bloomberg said the $5.1 billion could get the go ahead including the building\u2026","rel":"","context":"In &quot;Countries&quot;","block_context":{"text":"Countries","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/countries\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2021\/02\/EACOP-Pipeline-construction-2.jpg?fit=800%2C533&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2021\/02\/EACOP-Pipeline-construction-2.jpg?fit=800%2C533&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2021\/02\/EACOP-Pipeline-construction-2.jpg?fit=800%2C533&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2021\/02\/EACOP-Pipeline-construction-2.jpg?fit=800%2C533&ssl=1&resize=700%2C400 2x"},"classes":[]},{"id":6488,"url":"https:\/\/www.oilnewskenya.com\/index.php\/tanzania-president-to-lay-cross-border-mark-stone-for-oil-pipeline-uganda\/","url_meta":{"origin":8141,"position":5},"title":"Tanzania President to Lay Cross Border Mark Stone For Oil Pipeline in Uganda","author":"","date":"November 6, 2017","format":false,"excerpt":"President John Maghufuli of Tanzania and host President Yoweri Museveni will on Thursday lay a cross border mark stone at Luzinga village in Uganda for the East Africa Crude Oil Pipeline. This follows the visit by the Uganda president to Tanga in February where the two state leaders laid a\u2026","rel":"","context":"In &quot;Top News&quot;","block_context":{"text":"Top News","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/top-news\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2017\/08\/East-Africa-Crude-Oil-Pipeline-launch.png?fit=652%2C389&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2017\/08\/East-Africa-Crude-Oil-Pipeline-launch.png?fit=652%2C389&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2017\/08\/East-Africa-Crude-Oil-Pipeline-launch.png?fit=652%2C389&ssl=1&resize=525%2C300 1.5x"},"classes":[]}],"jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/posts\/8141","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/users\/24"}],"replies":[{"embeddable":true,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/comments?post=8141"}],"version-history":[{"count":1,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/posts\/8141\/revisions"}],"predecessor-version":[{"id":8143,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/posts\/8141\/revisions\/8143"}],"wp:attachment":[{"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/media?parent=8141"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/categories?post=8141"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/tags?post=8141"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}