EA Oil Pipeline Project to be Arbitrated by London

Posted on :Wednesday , 24th April 2019

Due to end months of haggling between the governments and oil companies, the UK will host arbitration talks in case of disputes arising out of the East African crude oil pipeline project.

During a technocrats meeting held in Kampala in January, arbitration was one of the issues that were deferred

Should any dispute arise, the arbitration will be done in London. Tanzania had said that it would host the arbitration, but the other partners favoured a country that was neutral. 

Now, the claim on the land stays as the most analytical issue that is pending in the ongoing host government agreement (HGA) talks. Investors want the expropriation clause to make sure that host countries that provide land do not turn around to claim it before expiry of project.

Progress is being made and only a few issues remain unresolved as mentioned by Robert Kasande, Permanent Secretary in Uganda's Energy Ministry.

"We should close these negotiations by the end of May,” he said.

The 1,445km export pipeline is anticipated to carry Uganda’s crude oil from Kabaale, northwest of Kampala to Chongoleani peninsula, to Tanga port in Tanzania. The pipeline will have a flow rate of 216,000 barrels of crude per day, the diameter being 24-inch.

The expropriation and overall security for investors were being discussed earlier this month at a media conference hosted by the Uganda Chamber of Mines and Petroleum.

In consideration of the final investment decision, the investors are seeking for the security of their investments and policies, and questioning whether contracts are solid as mentioned by UCMP chairman, Elly Karuhanga.

Tanzania, Uganda and the joint venture oil companies — Total E&P, Tullow Oil Uganda and China National Offshore Oil Company — are expected to fasten negotiations so that it will soon lead to the signing of agreements on the HGA, transportation and shareholding. The final investment decision is anticipated to be in the month of June.

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