Uganda oil pipeline

Uganda oil pipeline

The 900-mile pipeline would bring needed revenue to Uganda and Tanzania. It would also disrupt thousands of lives and habitats, not to mention its climate impact.

Published September 7, 2022

15 min read

On a map, the proposed pipeline resembles an elongated frying pan, unfolding in a giant arc across the eastern third of Africa. The pipeline will be fed by oil wells. It begins at Murchison Falls in Uganda. This is where the longest river in the world crashes through a narrow canyon with a force that makes the earth shake.

The pipeline itself–planned for completion by 2025—will then plunge south, underground, through chimpanzee-inhabited forests, across the equator, and under rivers and papyrus swamps that drain into Africa’s largest lake, Victoria. It will then travel east, passing small towns, family farms, and savannahs inhabited by lions, elephants, before reaching the coral reefs, mangroves, and Swahili Coast. The first barrels of Ugandan waxy crude, which is similar in consistency to shoe polish, will be loaded onto tankers before being shipped out to sea.

To the energy firms and governments behind the 897-mile East African Crude Oil Pipeline, it is the long-awaited final step in the launch of a new energy frontier. For Uganda, which has been itching to join the ranks of oil exporters since commercially viable deposits were discovered in 2006, the $5 billion pipeline–known as EACOP–represents a future boost to the national treasury and billions in related investments. Total Energies, a French multinational corporation that developed Uganda’s largest oilfield, is the majority owner of the pipeline. It will allow the flow of an essential global commodity at a lower cost and with fewer emissions than other projects of its type.

Climate activists across the region, though, disagree with such an optimistic assessment. They warn that the extraction of oil from Uganda would have “disastrous effects” on wildlife and people along the pipeline route. It is also too late to open up new areas for fossil fuel exploitation. The era of oil, they say, should be on the wane, not rise: The International Energy Agency (IEA) warned in a 2021 report that limiting global warming to 1.5 degrees Celsius to prevent climate change’s most destructive impacts would require new oil and gas development to stop immediately. Opponents are particularly vocal in opposition to the EACOP project because of the dangers that oil rigs, pipelines laden with toxic crude, pose to the region’s biodiversity, water supplies, communities, and its biodiversity.

The most vocal opposition is coming from a grassroots movement, #StopEACOP, which is waging a global campaign to convince would-be financiers not to fund the project. Like the activists who battled for a decade to stop the United States’ Keystone XL pipeline, planned to transport oil from Alberta’s tar sands to refineries on the Gulf Coast, they’ve focused their efforts on stopping the Uganda-Tanzania pipeline because it represents the wider project’s biggest vulnerability: getting the oil to market. They are optimistic that they will win, even though it may seem unlikely.

“Without this pipeline, there’s no oil extraction in Uganda,” says Omar Elmawi, a 34-year-old lawyer who coordinates #StopEACOP from his home in Kenya, Uganda’s neighbor to the east. “If we stop it, we believe it will send a powerful signal that it’s time to move beyond new fossil fuel development.”

A new frontier

For Uganda, a landlocked country of 48 million people home to terrain ranging from the snow-capped Rwenzori Mountains to Lake Victoria’s tropical shores, designs on oil production aren’t new. For generations, fishermen on Lake Albert, which is located near Uganda’s western border with Democratic Republic of Congo have reported oil seepages close to their shores. But it was only in 2006 that Tullow Oil, a small Anglo-Irish prospecting company, discovered 1.4 billion barrels of commercially viable reserves–enough to turn the country into one of Africa’s top ten producers.

Uganda’s government had hoped the oil would begin flowing a decade ago, but disagreements with companies over taxes and infrastructure, plus uncertainty over the pipeline’s route, stalled the project for years. In 2013, after Kenya discovered oil reserves of its own, the two countries signed a deal to build a slightly longer pipeline to the Kenyan coastal town of Lamu. Three years later, Uganda pulled out citing security and cost concerns, as well as the presence of Al Shabab, the Somali terrorist group, in Kenya.

Uganda and Tanzania began negotiations on an alternative route to the port of Tanga, just south of the Kenyan border. They struck a deal in 2020, months after Total, the world’s fifth largest oil and gas firm by revenue, bought out Tullow’s stake in its Uganda fields. Total and China’s CNOOC signed a “final investment determination” last February on the pipeline. Construction is expected to begin next year, according to project officials.

Uganda plans to refine some of the oil for the local and regional market, but most of it–an estimated 216,000 barrels per day–will travel through the 24-inch diameter underground pipeline for export. Since Uganda’s crude is semi-solid, it will be heated, via solar power, to 50degC (122degF.) If completed, EACOP would surpass India’s 416-mile Mangala pipeline as the longest heated crude oil pipeline in the world.

Economic independence

By global standards, Uganda’s planned output is modest. Oil demand in 2022 hovers around 100 million barrels per day, more than 400 times the amount Uganda would supply to international markets. Officials in Kampala, the capital, anticipate a welcome boost. According to global prices, Ali Ssekatawa (director of legal and corporate affairs at Petroleum Authority of Uganda), expects that the country will generate between $1.5 billion and $3 billion annually at peak production. Given that the government collects roughly $4.5 billion a year in domestic taxes, those sums are considerable–enough, he says, to help Uganda wean off foreign aid and to “give us economic independence.” Refining some of the oil at home, he adds, would boost energy security and eliminate risks posed by currency fluctuations.

While Ssekatawa says Uganda’s oil windfall could help fill gaps in public services like health and education, some critics question whether that will happen. A survey last year by a government watchdog suggests the country loses 40 percent of its annual budget to corruption. Others warn that oil reserves could become less lucrative over time if there is a fall in oil demand and a fall in prices. However, this is not a guarantee. To meet global climate goals under the scenario envisaged by the IEA, oil use would need to fall 75 percent by 2050. Yet the IEA concluded that under policies in place or announced by governments, oil demand at mid-century would be 15 percent higher than it was in 2020.

Even if the move away from fossil fuels picks up pace, says David Doherty, head of oil demand research at Bloomberg New Energy Finance, prices wouldn’t necessarily tumble. Because of its shallow oil fields, Uganda could be a source of crude oil even if there is a decline in demand. This is especially due to East Africa’s close proximity to Asia via the Indian Ocean. Doherty states that Uganda is in a good place, despite the need for a pipeline.

Environmental threats

Uganda’s partners, Total and CNOOC, are hardly alone in their thirst for new resources: According to Global Witness, an international watchdog, the world’s 20 largest fossil fuel companies are projected to spend $527 billion to develop new oil fields by 2030. An analysis by Reuters in July suggests energy firms are considering oil and gas investments on the African continent worth a total of $100 billion.

Few projects, however, impact so many sensitive environments. Ten of Total’s 31 well pads, where drilling takes place, will be within the boundaries of Murchison Falls National Park, Uganda’s largest protected area–where giraffes strut along the Nile and where elephants, decimated by poaching in much of Africa, are thriving. CNOOC’s wells are expected to extract oil from beneath Lake Albert, which is a popular birdwatcher’s spot and home to important fisheries. The pipeline itself, the World Wildlife Fund warns, could have “major impacts” on nearly 800 square miles of protected wildlife habitats, and a 250-mile stretch of the Lake Victoria basin, which more than 30 million people depend on for water and food production.

Although Total stresses that its operations in Murchison Falls account for less than one percent of the park’s land, a new road there leading to the oil wells has already led to conflicts. Elephants and buffalos, disturbed by the noise, have begun straying into nearby farms, trampling crops, according to Dickens Kamugisha, CEO of the Africa Institute for Energy Governance, a Kampala-based watchdog. He says that road building in the area is also drawing land speculators, agricultural investors, and even land speculators to the area. The region is known for its mahogany trees, and hundreds of chimpanzees.

By the time oil begins flowing, more than 18,000 households will have ceded land to make way for project infrastructure. The lion’s share of residents will be affected by the pipeline, which will be buried along a 30-meter-wide (about 100 feet) corridor that will be cleared of all structures, trees, and crops. In both Uganda and Tanzania, compensation to residents will not include the value of improvements made since a 2018 assessment. According to activists, farmers along the route have stopped planting cash crops that take longer for to mature like bananas, sugar cane, and coffee due to climate change. The whole process, says Baraka Lenga, a representative of Green Faith, a U.S. based NGO, in Tanzania, has already made households “poorer and more vulnerable.”

Although transporting fuel via pipeline is generally safer than hauling it by road or rail, a leak or spill is hardly far fetched: The United States, according to Department of Transportation data, has recorded nearly 6,000 “significant” pipeline incidents in the past two decades–or roughly one per every 400 miles of its 2.5-million-mile oil and gas pipeline network. Third-party experts who have been familiar with Uganda’s candlewax crude oil said that its semi-solid properties offer some advantages. The crude oil from Utah’s Uinta Basin has similar properties. According to John Mackey (head of the state’s Division of Water Quality), waxy oil from a leaking pipeline would likely cool quickly and harden quickly, allowing for time to respond. It would also dissolve fewer pollutants into water than a less viscous crude, he says, though it would still “leave a slick and have a sheen and be unhealthy for people and wildlife.”

Others warn of potential sabotage. Many oil majors, including Total and Nigeria’s largest oil producer, have been selling their offshore assets to prevent intentional damage to pipelines.

“There’s no way Uganda and Tanzania will have capacity to secure every inch of the pipeline,” Kamugisha says.

Following the money

The fight to stop the pipeline dates to 2017, when a nonprofit working with communities near Lake Albert reached out to global partners for help. EACOP opponents are not like the Keystone activists who tried to get the U.S. government off the fence by lobbying for a federal permit. Uganda and Tanzania, which both own a 15 percent stake in the pipeline, are firmly on board.

Instead, #StopEACOP, which has grown to include more than 260 organizations, focused on the project’s corporate actors. Campaign members filed multiple lawsuits and disrupted shareholder meetings. They also organized protests in cities around the world.

Above all, they followed the money: 60 percent of the pipeline’s $5 billion cost, they learned, was to be financed through borrowing, which they sought to cut off at the source. Two of the core organizations of the movement, Inclusive development International and Bank Track, created a list of institutions that had a history of financing fossil-fuel projects. The campaign asked them to pledge to not support the project and posted their responses on the #StopEACOP site. So far, 20 of 35 banks and 13 of 22 insurers have ruled out support.

“Most of these financial institutions have climate policies or at least want to make it look like they’re taking actions toward achieving net zero,” says Elmawi, who joined the fight against the pipeline last year after leading a successful effort to stop a coal plant near his hometown of Lamu.

The activists’ tactics aren’t without critics. Some in Uganda are questioning why banks that have supported fossil fuel projects in Europe should pull the plug. According to the World Bank, the average Ugandan emits less than a percent of the amount of C02 per year as the average American.

As the Petroleum Authority’s Ssekatawa notes, the largest pipeline networks in the world lie beneath Europe and the United States. For Western institutions to reject one in Africa, he says, reeks of “modern day colonialism:” Instead of plundering resources, as happened following Europe’s “Scramble for Africa” in the late nineteenth century, he argues, the West’s cutting off of finance would prevent Uganda from using them itself.

Even within Africa, Angelo Izama, a Ugandan researcher who’s working on a book about the country’s oil sector, believes Uganda has been unfairly singled out as a “poster child” for countries seeking to develop fossil fuels in the so-called age of net zero.

Despite the success of #StopEACOP so far, it faces an uphill struggle. Elmawi points out that some banks that pledged to avoid EACOP continue to finance Total directly. Three large institutions, South Africa’s Standard Bank, Japan’s SMBC and China’s ICBC, are still key advisors to this project. In May, the Financial Times and Bureau for Investigative Journalism reported that the New York-based broker Marsh McLennan was attempting to arrange pipeline insurance.

Although Bloomberg’s Doherty says some financing through debt is the norm, Total, which is valued at $128 billion, has the resources to finance the project itself. Some believe that Uganda’s government might borrow money to finance it as a last resort.

A warning for other projects?

Even if the pipeline does go forward, those fighting it believe the negative publicity could impact future investments. Part of the strategy, says Coleen Scott, who focuses on #StopEACOP at the human rights advocacy group Inclusive Development International, is to “give companies pursuing other fossil fuel projects pause.”

How much oil this will help keep in the ground, though, isn’t clear. According to Izama the noise around the pipeline may cause Western oil financiers and investors to pull back on Africa. However, capital from Asia and particularly China could fill much of that gap. Bloomberg’s Doherty says energy firms will continue to seek out new oil projects, on the continent and elsewhere, “as long as the costs make sense.”

Even if Total and other so-called majors pull back, he adds, smaller players that face less pressure to act on climate could swoop in to take their place.

African governments, meanwhile, appear increasingly keen to court oil investment–especially as Russia’s war in Ukraine has shifted global priorities away from climate goals and toward concerns about energy supplies. In July, the Democratic Republic of Congo, which produced a modest 22,000 barrels of oil per day in 2021, began auctioning 27 new oil blocks for exploration–including several that infringe on vast tracks of tropical rainforest and peatlands storing billions of tons of carbon, and two that are partially inside Virunga National Park, home to a third of the world’s remaining mountain gorillas.

Nigeria, where production averaged 1.5 million barrels per day last year, is seeking to boost oil output after years of decline, in part through a new tax structure that prioritizes offshore drilling. Mozambique and Tanzania are among the other African countries that are developing new natural gas reserves.

The fight over “Africa’s Keystone,” however it plays out, may only be a prelude to more battles ahead.

Jonathan W. Rosen splits his time between New England and East Africa. This story was reported by Rosen from Nairobi, Kenya.

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