The East Africa Crude Oil Pipeline Project May Change The African Oil Landscape

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As Total reached a final agreement with all relevant parties, the East Africa crude oil pipeline project planned with Total as the main shareholder was officially put on the agenda. According to the announced development plan, the East African Crude Oil Pipeline is 1,445 kilometers long and the daily crude oil transportation volume is expected to be 216,000 barrels. The East African Crude Oil Pipeline will transport crude oil produced in Uganda’s Lake Albert Oilfield to the Port of Tanga, Tanzania. The project will start construction as soon as possible and is expected to be officially put into use in 2025. The East African Crude Oil Pipeline will open up the energy transmission channel from the interior of East Africa to the Indian Ocean, which is likely to change the pattern of the African oil industry. 

Seamless steel pipe supplier, Nansteel Manufacturing Co.,Ltd understands that for a long time, Africa’s oil and gas resources are mainly concentrated in the north, west and central. Libya and Algeria in North Africa, West Africa, Nigeria, Gabon, Equatorial Guinea and Angola in Central Africa are all important oil exporting countries, and many countries have joined OPEC. In contrast, although East African countries have oil reserves, the value of industrial exploitation is relatively low, and the reality of underdeveloped economy has also caused difficulties in oil exploration and oil transportation, and the development of oil economy is extremely difficult. 

As the least developed landlocked country in East Africa, Uganda has actually discovered a large amount of crude oil reserves. Data show that Uganda’s total crude oil reserves are as high as 6.5 billion barrels of oil equivalent, of which the total amount of developable crude oil exceeds 2 billion barrels of oil equivalent. According to Bloomberg data, the total oil production of the two major oil and gas projects in Uganda, the Tilenga and Kingfisher, is even higher than the combined oil production of the two major OPEC member states, Gabon and Equatorial Guinea. Obviously, Uganda is likely to be among the world’s major oil-producing countries by virtue of these two major projects, and may even elevate the country to the ranks of middle-income countries. For Tanzania, the “toll toll” of US$12.7 per barrel of oil imported from Uganda will also bring a lot of income to the local area. The construction of the East Africa crude oil pipeline project will help Uganda and Tanzania achieve a “win-win”. 

In addition, because East Africa faces the Indian Ocean and has a geographical advantage closer to the Asia-Pacific region, coupled with lower local development costs, Uganda has a more cost advantage than Nigeria’s oil exports in West Africa. Industry organizations estimate that the break-even price of the Tilenga oil and gas project is only US$40.35/barrel, while the break-even price of the Kingfisher oil and gas project is about US$48/barrel. Low crude oil development costs, convenient locations, and the investment and construction of oil pipelines are likely to “lever” more capital into the oil and gas development field in East Africa, thereby changing the entire African oil and gas industry structure. 

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