South Africa’s Standard Bank is set to fund the Uganda-Tanzania oil pipeline project with a sum of US $ 5bn. The formally known as the East African Crude Oil Pipeline (EACOP), is a significant infrastructure project aimed at transporting crude oil from Uganda’s oil fields in the Lake Albert region to the port of Tanga on the Tanzanian coast.
This project represents a key development in the East African region’s efforts to exploit its oil resources and improve its energy infrastructure. It spans 1,445km and it is expected to facilitate the export of Uganda’s oil, discovered 17 years ago, thereby unlocking significant economic potential for the region.
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Hurdles
The French oil major holds the majority stake, positioning itself as a central player in driving the project forward. Both countries hold minority stakes and are crucial for the project’s execution and regional cooperation while China National Offshore Oil Corporation (CNOOC) is another significant minority stakeholder, contributing to the technical and financial muscle of the project.
The project has faced significant challenges in securing funding due to environmental concerns. Activists have raised alarms about the potential displacement of thousands of people and adverse effects on wildlife habitats. European Parliament’s 2022 resolution opposing the project has particularly complicated efforts to secure funding from European lenders.
Another challenge involves concerns over the displacement of communities and potential damage to ecologically sensitive areas. This has led to resistance from environmental groups and hesitancy among insurance firms and lenders. Over 20 insurers, including prominent names like SA Meacock, SiriusPoint, Enstar Group, Blenheim, and Riverstone International, have declined to insure the project under pressure from activists. The project is expected to be completed within the next few years, though timelines can vary based on logistical, financial, and regulatory challenges.