Ugandan officials remain optimistic about securing financing for the East African Crude Oil Pipeline (Eacop), despite seven financiers publicly distancing themselves from the $5 billion project. Government executives and oil company representatives assert the funding package is nearing completion, with plans to finalize arrangements within two months.
The project’s financial prospects improved after the Financial Times and Bureau of Investigative Journalism reported that New York-based insurance broker Marsh McLennan would serve as the pipeline’s insurance arranger. This follows previous rejections by global insurers Swiss Re, AXA, and Zurich, which had declined to cover the project due to environmental concerns.
In March, reports indicated TotalEnergies, the project’s lead promoter, was seeking financial guarantees from European and Asian export credit agencies to attract commercial bank loans. Ugandan officials remain cautious about disclosing specific financiers but acknowledge progress in the complex process.
Climate Activist Pressure ¶
Eacop deputy managing director John Bosco Habumugisha stated that potential lenders had conducted site visits in Uganda and Tanzania, promising to reveal financiers within two months. "We have many entities willing to fund the project," he said during a May 19 update in Kampala.
Insiders describe the financing process as a "headache" and "slow and complex" due to environmental opposition. A source noted that financiers often withdraw after negative publicity, citing the project’s ongoing campaigns by climate activists.
Financial advisors for Eacop include Standard Bank of South Africa’s Uganda subsidiary Stanbic, China’s Industrial and Commercial Bank of China (which owns a 40% stake in Standard Bank), and Japan’s Sumitomo Mitsui Banking Corporation.
Climate activist Dominika Lasota recently confronted French President Emmanuel Macron in Brussels, urging him to denounce Eacop. The project, backed by TotalEnergies with a 62% stake, has seen major lenders withdraw as global clean energy initiatives gain traction.
Financial Withdrawals ¶
Last week, five banks—Deutsche Bank, Citi, JPMorgan Chase, Wells Fargo, and Morgan Stanley—confirmed they would not finance Eacop. Insurer Beazley Group and Italian export credit agency SACE also opted out. Between 2020 and 2021, 13 banks, including two TotalEnergies lenders, abandoned the project.
TotalEnergies’ 2021 shareholder presentation outlined a carbon intensity target of 13kgCO2/boe for its Lake Albert project, aligning with its goal to achieve net-zero emissions by 2050. However, the pipeline’s construction—set to begin in 2022—will generate 34 million tonnes of annual carbon emissions, according to project estimates.
Eacop’s promoters claim environmental safeguards, including intrusion detection systems and leak monitoring, will mitigate impacts. The 1,443km pipeline, scheduled for completion in 2025, will transport 216,000 barrels per day from Uganda’s Lake Albert to Tanzania’s Tanga port.
TotalEnergies and China National Offshore Oil Corporation made a final investment decision in February 2022 to fund $10 billion in production and transportation infrastructure for Uganda’s oil reserves.
