French company Total has awarded the $1.9 billion deal for the construction of its Lake Albert oil production Tilenga project in Uganda to a consortium led by British and Chinese firms, the company announced on Monday.
Total, the lead investor in Uganda’s oil projects, said it signed contracts for the main surface facilities Engineering, Procurement, Supply, Construction and Commissioning (EPSCC) contracts as well as five drilling packages for the Tilenga project located in Nwoya and Buliisa Districts.
The companies that won the lucrative deal include CB&I UK Limited, a McDermott subsidiary company, and Chinese firm Sinopec International Petroleum Corporation the EPSCC of the central processing facility, flowlines and other associated surface facilities.
The deal also includes contracts with Schlumberger Oilfield Eastern Limited for three well engineering packages that include upper completions, artificial lift and associated services, directional drilling, well logging, measurement while drilling, buttonhole assembly, data transmission and real time operation centre services, as well as wellheads, Christmas trees and associated services.
Other firms in the deal are Vallourec Oil and Gas France which was awarded the contract for one well procurement package, which also includes casing, tubing and associated services, and ZPEB Uganda Co. Limited for one oil rig package that comprises onshore drilling rigs, tubular running and fishing services.
“Following a comprehensive, competitive and thorough tender evaluation and contracting process that began with the phased submission of Front-End Engineering and Design proposals to ensure project optimisation, we are pleased to sign these conditional letters of award for the Tilenga project to these five highly qualified industry players.
“The launch of these contracts underscores our commitment to developing the Tilenga project while maximising value and viability of the project, and observing the most stringent Health, Safety, Social, Environment and Quality standards to which the contractor must adhere,” said Pierre Jessua, General Manager, Total E&P Uganda.
The companies above have also made significant commitments to promoting national content through employing Ugandans, use of local goods and services and technology transfer.
This is the first major deal out of several Tilenga packages that will in total cost an estimated $4 billion to $5 billion when the tendering process for all the projects is completed and contracts awarded, an industry source told The EastAfrican.
“Thanks to this first step, the Tilenga project development phase has a target to achieve first oil in 43 months. All the companies will deploy their years of expertise and best-in-class technology to delivering the project while also ensuring sustainable value retention in the economy through promotion of national content,” Mr Jessua added.
Along with the CNOOC operated Kingfisher, Tilenga is one of two oil projects in the Lake Albert region for which the Petroleum Authority of Uganda awarded production licences.
The project has production capacity of 190,000 barrels of oil per day, includes six fields to be developed, 426 wells to be drilled from 31 well pads, one central processing facility located in Buliisa, outside the Murchison Falls National Park.
Its location in protected and the conservation area remains a concern for environmental activists, but Total says the project has been designed to maximise the Murchison Falls National Park, the footprint of the temporary and permanent facilities, which will occupy less than 0.05 percent of the park’s surface area.
Industry sources say the award of contracts for Tilenga signals optimism for the financing of the $3.5 billion East African Crude Oil Pipeline (Eacop) whose funding remains uncertain after targeted lenders pulled out over the project’s environmental risk and human rights violation.
The 1,443km Eacop, which starts from Hoima in western Uganda to the Indian Ocean port of Tanga in Tanzania, is key for the transportation and commercialisation of Uganda’s oil to get to the export markets.