With the ongoing development of the East African Crude Oil Pipeline (EACOP), Uganda’s oil industry is entering a transformative phase that promises to unlock significant economic and energy opportunities for the country. Spanning 1,443km from Uganda’s Lake Albert oilfields to Tanzania’s Port of Tanga, the $5 billion EACOP project – which was 47.1% complete as of November 2024 and is expected to come online in 2026 – serves as a key component to Uganda’s broader strategy to harness its oil resources and drive economic growth.
Unlocking Global Market Access
Uganda expects first oil production from the Kingfisher and Tilenga oilfields in 2025 while a planned licensing round for the 2025/2026 fiscal year is poised to attract new investment in underexplored acreage. While the country has long-faced challenges associated with export feasibility, the development of the EACOP offers a direct export route for the landlocked country, connecting Uganda to global oil markets. This will allow Uganda the opportunity to sell its crude more efficiently and at better prices, cutting down on logistical costs while improving the profitability of its oil exports. The pipeline also stands to benefit neighboring Democratic Republic of Congo, which is currently in discussions with Uganda to transport its own oil through EACOP once it starts commercial production.
New Investments in Oilfields
EACOP represents the largest single investment in both Uganda and Tanzania, having secured $2 billion in global financing to date. With development of the EACOP gaining momentum, further investments are expected to pour into Uganda’s oil sector.
Major international oil players, including TotalEnergies and the China National Offshore Oil Corporation, as well as Tanzania and Uganda’s state-owned Tanzania Petroleum Development Corporation (TPDC) and Uganda National Oil Company (UNOC), respectively, are involved in the project, showcasing confidence in the country’s long-term oil prospects. Furthermore, the completion of the pipeline will likely encourage additional upstream investments, both from current stakeholders and new entrants. The pipeline is set to facilitate the development of Uganda’s oilfields by improving the economics of production. The infrastructure enables producers to efficiently transport oil to the coast, enhancing Uganda’s attractiveness as an investment destination in the regional energy sector.
Addressing Key Challenges
Uganda has faced a number of delays in securing financing, a slow regulatory environment and concerns over environmental and social impacts. However, with international financial institutions such as Standard Bank stepping in to support the project, as well as China’s participation through the backing of Sinosure and the Export-Import Bank of China, international confidence has played a significant role in bridging the project’s financing gap.
Environmental and social challenges have also been at the forefront of the project. However, the EACOP has been committed to maintaining high environmental and safety standards, with dedicated plans for land acquisition, compensation and mitigation of environmental risks. Local communities in both Uganda and Tanzania are expected to benefit from job creation and infrastructure as the pipeline project progresses.
The pipeline will not only deliver new oil and gas resources to market, but also open a new chapter in East African trade and cooperation. EACOP is currently in its engineering, procurement and construction phase and is seeking another $3 billion in debt financing, reflecting the financing gap within Africa’s midstream sector.
