Uganda Agrees New Oil Tariff With Pipeline Investors
May 16 2019 - 2:56AM
Dow Jones News
By Nicholas Bariyo
KAMPALA Uganda--Uganda has agreed a marginal hike to the tariff
it will pay to ship crude through a planned export pipeline,
unlocking the latest hurdle for the long awaited development of the
East African nation's vast oil fields, the energy and minerals
minister said Thursday.
After months of negotiations, Uganda agreed to pay $12.70, up
from the original $12.20, for each barrel shipped through the
planned 800-mile pipeline to the Indian Ocean port of Tanga in
Tanzania, Irene Muloni said.
It's boost for the country's efforts to develop it's vast crude
oil fields, estimated to contain as much as 6 billion barrels,
whose development has stalled for years due to lack of
infrastructure facilities such as an export pipeline or a
refinery.
"Government has reached an agreement with joint-venture partners
on the tariff and the business model for the project is being
reviewed to reflect the new position," Ms. Muloni said.
The joint-venture partners, including French oil giant Total SA
(FP.FR), have been pushing for a higher tariff ahead of financial
close for the $3.5 billion project, amid renewed fears about future
global oil prices. A spokeswoman for Total's unit in Uganda
couldn't be reached for immediate comment.
Total, China's CNOOC Ltd. (0883.HK) and the U.K.'s Tullow Oil
PLC (TLW.LN) are currently developing the oil fields, and hope to
produce as much as 220,000 barrels a day by 2023.
South Africa's Standard Bank and Japan's Sumitomo Mitsui Banking
Corp. are helping in raising credit to fund the pipeline
project.
Uganda's hosts East Africa's largest undeveloped oil assets and
their commercialization could turn this coffee growing nation into
a major oil producer in Sub-Saharan Africa. However, Fitch
Solutions warns that delayed construction of the pipeline poses
significant downside risk to the sector.
Write to Nicholas Bariyo at nicholas.bariyo@wsj.com
(END) Dow Jones Newswires
May 16, 2019 03:41 ET (07:41 GMT)
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