Silk Road Headlines_21st February, 2020

BRI to unlock Uganda’s oil

Even when COVID-19 is delaying many BRI projects, new plans are announced. One of those is a BRI-themed $118 million loan for Uganda for the construction of three roads.

These “oil-roads” will connect Uganda’s existing road network with the country’s oil fields in Albertine Graben, north of Lake Albert, not far from the border with the Democratic Republic of Congo. The fields were discovered 15 years ago but production has yet to start due to a lack of infrastructure [Uganda to borrow $118m from China for roads].

The new roads are part of a much larger scheme to unlock the area and begin oil extraction. Uganda will borrow the money from the Industrial and Commercial Bank of China (ICBC) and the roads will be built by China Communications Construction Company (CCCC). The latter is a big player in Uganda with road projects all over the country, including in the capital Kampala.

The Albertine Graben oil fields have an estimated reserve of 6 billion barrels. The main development program is the Lake Albert Development Project. This project is jointly owned by China National Offshore Oil Corporation (CNOOC), Total, and UK’s Tullow Oil. Each company owns 33.33 percent. Tullow Oil is an exploration company which discovered most of the fields. In 2017 Tullow said it wanted to sell its stake to its partners, but this sale was cancelled in 2019.

Companies are also the main owners of the proposed $3,5 billion East African Crude Oil Pipeline (EACOP). This 1445-kilometer pipeline with a capacity of 216.000 barrels a day will transport oil produced at Lake Albert Development Project to the port of Tanga in Tanzania. The pipeline has been delayed many times and it is still unclear when construction may start [Delays in Uganda’s oil].

At the same time, other Chinese companies are working on other energy-related projects. Power Construction Corporation of China (POWERCHINA) has applied for a license to build the $1.4 billion Ayago hydroelectric power plant on the Victoria Nile, north of Lake Kwania [Uganda: Chinese firm wants to build dam on Nile River]. The project will have a capacity of 840 megawatts, which will make it Uganda’s largest power plant. The same company (previously operating under the SinoHydro name) is currently finalizing construction of the $1.7 billion 600 megawatts Karuma Hydropower Project, also on the Victoria Nile.

In green energy, China Energy Engineering Corporation (CEEC) announced plans to build a $500 million 500 megawatts solar power project, with construction set to start within three years.

Finally, for a somewhat different form of energy; Uganda has agreed to export swim bladders (fish maw) of the Nile perch to China, where such bladders are believed to have hefty aphrodisiac powers.

By Clingendael