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Standard Bank to Finance Controversial $5B African Oil Pipeline

Standard Bank to Finance Controversial $5B African Oil Pipeline

Standard Bank Group Ltd. announced it will proceed with funding TotalEnergies SE’s planned 1,443-kilometer East Africa Crude Oil Pipeline project following a comprehensive, multi-year review.

The $5 billion pipeline, extending from Uganda’s oil discoveries to an export terminal on Tanzania’s coast, has faced huge opposition from environmental groups scrutinizing potential lenders, Bloomberg reported.

In 2021, Standard Bank, Africa’s largest lender, engaged an independent adviser to guide its decision on the project’s involvement.

“We have done our governance processes internally,” Standard Bank Chairman Nonkululeko Nyembezi said in an interview in Rio de Janeiro. That includes a credit review and “the environmental and social due diligence, which took quite a long time,” she added.

Controversies surrounding the project

The Eacop project has been a bone of contention between environmentalist groups and the stakeholders involved in the project, including French conglomerates TotalEnergies and Chinese investors.

Groups opposed to the East Africa Crude Oil Pipeline (EACOP) have urged banks to avoid the project, citing concerns over wildlife habitats, community impact, and increased greenhouse gas emissions.

According to a Human Rights Watch report, residents displaced by the pipeline’s construction have received inadequate compensation and faced significant disruptions to their lives.

Conversely, Ugandan President Yoweri Museveni has championed the project, highlighting its support from China’s leader, Xi Jinping. The cost of the pipeline has risen to $5 billion from an earlier estimate of $4 billion, as noted by Uganda’s energy minister in January.

“We have all the lenders,” Nyembezi said, declining to identify them. She didn’t comment on the total amount of funding.

She mentioned that Standard Bank is limited in how much it can disclose publicly until a decision is made on the pipeline’s funding. The lender anticipates TotalEnergies to make an announcement in the coming months, noting that field developments are already in progress.

“There is complete commitment on the part of the sponsors of the oil projects to get it done,” Nyembezi stated.

Business Insider

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