Chinese and French oil giants sealed a landmark $10 billion deal on Tuesday to develop Uganda’s energy resources and build a vast regional oil pipeline, a megaproject that has incensed environmental groups.
The so-called Final Investment Decision was announced at a ceremony in Kampala by the heads of France’s TotalEnergies and the China National Offshore Oil Corporation (CNOOC).
“Today is the day we commit to invest $10 billion in the Tilenga and Kingfisher projects and the 1,443-km long pipeline,” TotalEnergies chairman and CEO Patrick Pouyanne said in a statement.
The project aims to exploit the huge crude oil reserves at Lake Albert, a 160-kilometre (100-mile) natural border between Uganda and the Democratic Republic of Congo.
The oil would be pumped from landlocked Uganda through a 1,443-kilometre (900-mile) heated pipeline — said to become the longest of its type when completed — through Tanzania to the Indian Ocean port of Tanga.
Mr. Pouyanne described the controversial pipeline as a “masterpiece” of a project, although critics charge that it threatens livelihoods and fragile ecosystems in the heart of Africa.
“From today with the FID, the project will fully enter into the construction phase,” he said.
CNOOC Uganda president Chen Zhuobiao said: “Achieving FID is a first step towards achieving first oil and unlocking opportunities for investment and development of Uganda and the whole region.”
The ceremony was also attended by Ugandan President Yoweri Museveni and Tanzania’s Vice President Philip Mpango.
Lake Albert lies atop an estimated 6.5 billion barrels of crude, of which about 1.4 billion barrels are currently considered recoverable.
In Uganda, the drilling is located in several natural reserves, one of which extends to Murchison Falls, the country’s largest national park.
TotalEnergies, formerly Total, said last year it had taken steps to reduce the project’s impact on people and the environment, but conservation groups charge it will be devastating.
The pipeline project would be “displacing thousands of households, endangering water resources for millions of Ugandans and Tanzanians, devastating vulnerable ecosystems and pushing the world further into climate chaos,” campaign group 350Africa.org’s regional director Landry Ninteretse said in a statement.
A consortium of Ugandan and French NGOs filed a lawsuit in 2019 against the French company accusing it of failing to abide by its legal obligations to protect the environment and the rights of the people affected by the project.
In December, the Court of Cassation, France’s highest, ruled that the case should be heard in a civil court rather than assigned to a commercial tribunal, in what the activists said was an important victory.