Uganda has revised its oil and gas volume projection downwards and pushed forward production timelines due to a delay by investors to make final investment decisions for both the pipeline and upstream project.
A disparity over pipeline tariffs emerged during the host government agreement (HGA) negotiations between Uganda and joint venture partners Total E&P, Tullow oil Uganda and China National Offshore Oil Company.
The HGA is an agreement entered between a host government on the one side, and the project investors on the other, relating to the implementation of the project in the specific territory. Two HGAs are expected to be signed between joint venture oil companies and Uganda and Tanzania separately.
The agreements include the different government obligations, investor duties, environmental obligations, other relevant standards and procedures, as well as required stability clauses with respect to development, construction and operation of the project.
While the government maintains it must have the least cost route to pump the crude from Hoima to Tanga in Tanzania, it emerges that the oil companies are introducing different financial models, each with a different bearing on the final tariff, thereby prolonging the discussions.
Source: East African