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UPDATE 2-Uganda sees work on oil pipeline with Total starting shortly

(Updates with Tanzania comments)

KAMPALA, Feb 25 (Reuters) - Uganda said on Thursday the construction of a $3.5 billion oil pipeline with France’s Total due to run through neighbouring Tanzania was expected to begin shortly.

Uganda discovered crude reserves in the Albertine rift basin in the west of the country near the border with the Democratic Republic of Congo in 2006. Government geologists estimate overall reserves at 6 billion barrels.

“We expect construction of the pipeline to start shortly after we have finalised FIDs (final investment decisions), and we expect to conclude the FIDs by the end of March,” said Robert Kasande, a senior official at the ministry of energy.

“We are in the final stages of negotiating a shareholders’ agreement” for the pipeline, he told Reuters.

Total and China’s CNOOC now own Uganda’s oil fields after Britain’s Tullow exited the country last year.

Asked by Reuters on Thursday when it expected to commence construction of the pipeline, Total declined to comment.

On Wednesday, Tanzania’s foreign minister Palamagamba Kabudi said he met with Total’s Director for Africa, Nicolas Terraz, while on a visit to Paris last week and discussed the project.

“They said everything is set,” he told reporters in Dar es Salaam. “The construction of the pipeline will begin in the second half of March. This is a great step and the construction will be completed in 2024.”

The start of commercial crude production has been repeatedly delayed by a lack of infrastructure needed to export the oil from landlocked Uganda and by disagreements over field development strategy.

The planned crude export pipeline is to run a length of 1,445 km (900 miles), beginning in Hoima in western Uganda and ending at the Indian Ocean seaport town of Tanga in Tanzania.

About two thirds of the pipeline’s cost will be financed by debt, and a Ugandan unit of South Africa’s Standard Bank Group and Japan’s Sumitomo Mitsui Banking Corp are jointly helping to raise the funding.

The government has said that once pipeline construction begins, it would take two-and-a-half to three years to complete.

Uganda is eager to accelerate the plan to begin pumping crude and earning petrodollars, which President Yoweri Museveni hopes will help revive an economy hit hard by the coronavirus pandemic. (Reporting by Elias Biryabarema. Additional reporting by Nuzulack Dausen in Dar es Salaam. Writing by Omar Mohammed. Editing by Gareth Jones and Mark Potter)

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