A Clog in the Pipeline

The proposed East African Crude Oil Pipeline faces global opposition. Now, the pipeline’s financing faces uncertainty.

The fate of the controversial East African Crude Oil Pipeline (EACOP) project is hanging in limbo following the announcement by South Africa’s Standard Bank, one of its key financers, that it was suspending support pending an environmental and social impact study of the project.

Once completed, the East African Crude Oil Pipeline will run 900 miles through protected wetlands, forest reserves that are critical wildlife habitat, including Murchison Falls National Park pictured here, and cross more than 200 rivers and thousands of farms. Photo by Maciej.

The bank’s early March decision came following months of concerted global campaigning by environmental and human rights groups seeking to stop the proposed pipeline that would run some 900 miles from oilfields along the shores of Lake Albert in Uganda to a port in Tanzania. The EACOP, which is spearheaded by the French oil giant, Total, will wind through protected wetlands, 12 forest reserves that are critical elephant, lion, and chimpanzee habitats, and cross more than 200 rivers and thousands of farms as well.

On March 1, a letter signed by 263 environmental and human rights nonprofits – including Friends of the Earth International, 350.org, the Sierra Club, and Inclusive Development International – urged a list of 25 banks with a stake in the project, including Standard Bank, not to finance it.

The risks of this project include “significant human rights impacts to local people through physical displacement and threats to incomes and livelihoods; unacceptable risks to water, biodiversity and natural habitats; as well as unlocking a new source of carbon emissions that will either prove financially unviable or produce unacceptable climate harm,” states the letter, which also adds that the project is facing “widespread and growing resistance.”

There have been legal efforts to block the project as well. In November 2019, a group of nongovernmental organizations based in various parts of East Africa went to the East African Court of Justice to block the EACOP, which if built would be the longest heated crude oil pipeline in the world. These groups – the Centre for Food and Adequate Living Rights, the Africa Institute for Energy Governance, the Kenya chapter of Natural Justice, and the Center for Strategic Litigation – argued that approving the pipeline would be ignoring the human rights abuses and environmental impact of a such a pipeline.

And in 2019, six environmental organizations from France and Uganda sued Total for human rights abuses and environmental damage in Uganda and Tanzania in connection with these projects. That case is still dragging in French court.

Meanwhile, Uganda went ahead and approved an environmental impact assessment for the project in December 2019. A few months later, in February 2020, Tanzania also signed off on the project. Once completed, EACOP will run from Western Uganda south to Tanzania, curving around Lake Victoria and heading for the coast to the port of Tanga, just north of Zanzibar. Until the Standard Bank announcement, construction was expected to begin in April.

“An estimated 14,000 households across Uganda and Tanzania have lost or will lose land as a result of the pipeline; hundreds of families will need to be resettled, and thousands more will be affected by the associated oil development projects,” the activist groups’ letter to the banks states. “To put major national parks, wetlands, rivers and lakes, not to mention the livelihoods of millions at risk, is as dangerous as it is unacceptable.”

The discovery of these oil reserves is relatively recent. It was only in 2006 that government geologists in landlocked Uganda found crude oil reserves estimated at 3.5 billion barrels in Hoima, near the country’s border with the Democratic Republic of the Congo. China National Offshore Oil Corporation and Total plan to drill some 500 wells in the two oil fields, called Kingfisher and Tilenga. Construction work on the oil wells is already underway at these locations. In August 2017, Uganda’s President Yoweri Museveni and Tanzania’s President Joseph Pombe Magufuli commissioned the construction of the pipeline to transport the crude oil to the outside world. The pipeline will carry 216,000 barrels of crude oil a day, and will require heating to 50 degrees Celsius because the oil, which is low in Sulphur, will otherwise solidify in the pipe.

According to Elizabeth Rogo, President of the Africa Energy Chamber for East Africa, a pan-African oil and gas lobby group, the proposed pipeline will create additional jobs for locals while making the two East Africa states viable as major oil frontiers. “It’s a big win for the local and regional oil and gas industry and propels the East Africa region in playing a role in helping the energy sector rebound,” says Rogo.

Standard Bank and Sumitomo Mitsui Banking Corporation, one of the three largest banking groups in Japan, were among the initial financial supporters of the project, with a vast majority of the pipeline’s ownership going to the French oil and gas company Total and the China National Offshore Oil Corporation. Bloomberg reports that a $3.5 billion loan was expected to be raised for the project, 30 percent of which will be provided by the equity investors. Now, that financing is up in the air.

Kate Jones, a spokesperson at Standard Bank, told Earth Island Journal that the bank is committed to doing the right business the right way. “Along with financial and local economic considerations around our lending decisions, we support responsible investment through assessing and managing our environmental, social and governance risks,” she said.

Sumitomo Mitsui Banking Corporation, which is still committed to the project, did not respond to requests for comment.

The pipeline’s opponents, however, see EACOP as a source of irreparable damage. David Pred, executive director of Inclusive Development International, a human rights organization based in Asheville, North Carolina, says that the minimal and mostly temporary jobs the project would create pale in comparison to the physical and economic displacement these projects will cause to thousands of families along the pipeline – not to mention the threat that oil spills would pose to more than 40 million people whose livelihoods depend on the critical ecosystems of the Lake Victoria basin.

“If that wasn’t bad enough, we estimate that the production and burning of these new oil fields would result in over 33 million tons of CO2 emissions each year, which is significantly greater than the current combined emissions of Uganda and Tanzania,” says Pred. “If the world is going to have any chance of averting a climate catastrophe, we simply cannot afford to be developing any new oil fields. And with the price of oil falling dramatically in the last year, the project does not make economic sense for Uganda.”

Pred also mentions that since the discovery of oil in Uganda, the upstream oilfields intended to feed into EACOP have dropped 70 percent in value – and are expected to continue to plunge as the world transitions to renewable energy.

The project would also impact roughly 2,000 kilometers of protected wildlife habitat, particularly in the Biharamulo Game Reserve and Wembere Steppe Key Biodiversity Area. The pipeline also would cut off important wildlife corridors for the eastern chimpanzee, elephants, and other species. A 2017 report from the World Wildlife Fund claims that the pipeline would increase the risk of poaching and illegal wildlife trading.

There is also a high risk of freshwater pollution and degradation too, especially in the area around Lake Victoria, which supports the livelihoods of more than 30 million people in the region.

“The right to clean health is impaired,” says Joy Akoli Atine, the program officer at Uganda based Global Rights Alert (GRA), “the right to access to information for the affected communities is badly compromised, and the right to participate in decision making of the project is denied.”

It’s uncertain when the pipeline will be completed, particularly as banks begin to reassess their commitment to the project. In the meantime, EACOP’s opponents plan to continue fighting this project, to safeguard East Africa’s landscape and people.

“The global alliance that is mobilizing to stop EACOP is gathering steam and we will be working around the clock in the next year to ensure that this project does not move forward,” says Pred. “As more and more banks and insurers commit to end new fossil fuel finance in line with the Paris Climate Agreement, we are optimistic that EACOP will never secure the funding to break ground.”

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