Peter Muliisa, Chief Legal and Corporate Affairs Officer at Uganda National Oil Company, spoke to Julius Barigaba about the status and viability of the East African Crude Oil Pipeline (Eacop).
What is the fate of Eacop given the current financial, environmental and legal constraints?
We pushed environmental and climate activists to start a hashtag and a movement to mobilize people to support Eacop to stop. The thrust of their argument is that it is dangerous for the environment, it will displace people and wildlife; and that it will cause large emissions that would exacerbate climate change.
We are preparing a resettlement action plan that examines the impacts of the projects on people and establishes mitigation measures based on the standards of the International Finance Corporation established by be accepted by all banks in the world.
The country that Eacop needs is a 30 meter corridor. So in most places you don’t take the whole country from the people, but a piece of it. After construction, the pipeline will be fully buried. When it’s laid and everything is done, the land will be restored.
Why was there a delay at all?
The delay was mainly due to the fact that we still had no final investment decision made. But we had done everything else – we had done the PAPs [Project Affected Persons], we had done the assessments and to the baseline we added the disruption rate. Now we are at the end of the resettlement action plan. It’s a long process.
The project has also been accused of environmental damage. We know the project has an environmental issue, so we conducted an environmental and social impact assessment.
An oil spill could happen on a pipeline at any time. How do you mitigate this?
The pipeline is made of double-layer steel. It has isolations that allow us to monitor what’s happening at all times from the control centers. And for every river crossing, we’ve installed a valve on both sides of the river.
We have an oil spill contingency plan in place that is mandated by law and proven. It sets out steps we would take to ensure action is taken very quickly and efficiently.
Eacop will create emissions. Could this derail the goals of the Paris Agreement?
We have done as much as possible to make it a net zero emitter project. Basically, this means you look at carbon emissions and offset them by creating scenarios that reduce carbon emissions to the amount you might emit.
Is the call to give up fossil fuels too soon ? especially for Uganda?
Fossil fuels are not eliminated; It’s about how we use them and what alternatives we create so that we have a balanced ecosystem so that you emit enough not to be exposed to the effects of climate change.
Critics say that they don’t like this project , Uganda will miss the green energy transition. Are we thinking about this transition?
Up to 68 percent of people in sub-Saharan Africa have no access to electricity. This is the energy poverty we are dealing with. You don’t transfer them from anything; they are at zero. I’ve read credible reports that say we’re unlikely to meet the Paris targets by 2050.
Does that mean we won’t “develop responsibly”?
Upstream operations contribute 10% of emissions, but within the upstream there are certain elements such as methane leakage. One element that causes a lot of emissions is flaring. As a country, we have made flaring a criminal act in Uganda.
Will the activists unfairly target Uganda?
There is a need to Reducing emissions to achieve the Paris targets by all countries.
What we would expect from activists is not that they target a neutral project aimed at lifting people out of energy poverty.
Why are you having trouble with Eacop’s funding?
We are confident about the funding. Project financing is a standard process. They contact financing companies and carry out a market survey at the beginning of the project. When the project is mature, issue an information memorandum to all of these funders now. Some will tell you we won’t attend and others will tell you we will attend.
Those who say they will attend give them a term sheet, they state their answer the back term sheet. When we received our returns we were 20 percent oversubscribed.
By July we should be able to disclose all of the finance companies. We have companies from Europe, Asia and around the world.
Respected voices in the oil and gas industry have repeatedly said that funding for Eacop will come from anywhere but Europe. Is that the case?
It’s a general feeling because the Organization for Economic Co-operation and Development (OECD) and I think the G7 all came and said we don’t want to fund fossil fuels.< /p>
But the reality is that banks will continue to fund good, responsible projects, even in the fossil fuel space. You must have seen this press release from the UK Energy Secretary, where he said fossil fuels will continue to be with us for decades to come. It’s the truth.
How are your upstream exploration efforts going?
We have negotiated a Kasuruban Production Sharing Agreement (PSA); We bid for two but we didn’t get Omuka. We negotiated a PSA with the ministry, we agreed on the terms. It is now with the Attorney General for approval and once he approves we will sign it and start exploring this block.
Eacop was supposed to ship crude oil for 25 to 30 years. If we don’t have new discoveries, we risk having assets stranded in our midst. Are you confident that you will explore and discover oil?
When we designed the pipeline, these were the questions we looked at in the economic model. The pipeline as it is today is based on the resources that we know, otherwise you can’t be sure [of future discoveries].
And with the resources that we know, we will be in the Be able to pay debt, earn return on equity. So it’s a viable, commercially viable project.
We have the engineering capacity. We probably have some of the best trained technicians in geology, geophysics and geosciences.
What has given us trouble in general is funding and risk taking, especially now that we are getting money from the Treasury Department.
Education: LLB of Makerere University; Diploma in Legal Practice from the Law Development Centre;
LLM in Petroleum Taxation and Finance from the University of Dundee
Professional Experience: Peter began his career as a judge in Uganda in 2004. Later He joined the Uganda Revenue Authority where he spent 11 years in the litigation office and made most of the key tax decisions.
He joined the Uganda National Oil Company in 2016.