Funding for EACOP shifts to China as EU banks develop cold feet

Financing of the East African Crude Oil Pipeline (EACOP) could be fully shifting to China as European banks pull out, Kikubolane has established.

This comes after Standard Chartered Bank pulled out of funding for the project following pressure from climate change activists who flagged it as a potential big emitter of carbons.

This has left TotalEnergies looking for quick fixes in view that the project completion timeline is due in 2025.French energy giant TotalEnergies has contracted China Petroleum Pipeline Engineering (CPP) to build and supply line pipe for the East African Crude Oil Pipeline (EACOP), an indication that the funding of the multibillion dollar project could be shifting to China.

Italy’s ISOF Construzioni SRL had been approved to manage the coating plant for the pipes and fitting but this has now been taken over by CPP, which is a subsidiary of state-owned China National Petroleum Corporation (CNPC).

Already, China National Offshore Oil Corporation (CNOOC) owns an eight percent stake in EACOP.

Already, Sinopec is the joint main contractor alongside McDermott, for the Tilenga project, which is operated by TotalEnergies, while another Chinese firm, China Petroleum Engineering and Construction Company (CPECC) is building ground facilities in the Tilenga oilfield.

Already, land acquisition for the project is at snail pace and has stood at 85 percent now for some time amid compensation delays.

While government of Uganda officials insist the project is on schedule, with President Museveni insisting that the EACOP will be built no matter the opposition from activists, officials at TotalEnergies are said to be racking their brains to try and raise the required funding in time.

Dennis Kakembo, an energy law specialist is quoted by The EastAfrican newspaper as saying that the shift of the contracts to China is an indication of who is now pulling the strings in regard to the project management.

“You have to look at where financing is coming from… Whether it’s construction, insurance, financing, these deals always go where the money for the project is sourced,” he is quoted as saying.

“If the Europeans were financing the project, you would expect them to influence their companies to take up these deals,” Mr Kakembo noted.

Nevertheless, Uganda government officials insist that multiple funders are available to undertake the project from various countries such as Europe, Middle East, Africa, and China. Energy Minister Ruth Nankabirwa has said the pipeline project “will get money” from Beijing.

The 1,443km-long pipeline is expected to transport 216,000 barrels per-day of oil from Tilenga and Kingfisher oilfields in the Lake Albert basin to Tanga Port on Tanzania’s coast.

TotalEnergies holds 62 percent stake in the project, while Uganda National Oil Company (Unoc) and Tanzania Petroleum Development Corporation hold a 15 percent state each, and CNOOC eight percent.