Crude Pipeline FEED Opens Up Endless Opportunities
Kampala, January, 2017
The governments of Uganda and Tanzania have launched the Front End Engineering Design (FEED) study for the East African Crude Oil Pipeline (EACOP). The launch, on Monday January 9, 2017, was witnessed by the Joint Venture partners (Total, Tullow & CNOOC).
The FEED process, which is estimated to be completed within eight (8) months from launch-date, will be carried out by Gulf Interstate Engineering (GIE - http://www.gie.com/), from Houston Texas, USA, at an estimated cost of $11.5m.
FEED is basic engineering that comes after the conceptual design or feasibility study. The FEED focuses the technical requirements as well as rough investment cost for the project. This will later form the basis for detailed engineering as well as the Final Investment Decision (FID).
At feasibility stage, the 24 inch, 1,445km long pipeline was estimated to cost $3.55bn but the FEED will provide more precise cost estimates for what will become the longest heated pipeline in the world upon completion.
Uganda’s Minister of Energy and Mineral Development, Hon. Irene Muloni says all parties involved have agreed to fast-track the pipeline construction in order to reach the target of First Oil in 2020.
“To achieve this 2020 target, the Environmental and Social Impact Assessment studies as well as the Resettlement Action Plan are being done concurrently,” said Muloni.
Under the EACOP, the special purpose vehicle set-up to manage the pipeline, the FEED process will be supervised by a combined team of over 85 individuals including contractors and officials from Uganda and Tanzania; operating from Kampala, Dar-es-salam and Houston, Texas.
Though the shareholding structure is not yet agreed upon, both the Uganda and Tanzania governments plus the JV partners will hold a stake in EACOP; with other parties encouraged to come on board.
“The Democratic Republic of Congo (DRC) has expressed interest in partnering with us on this pipeline before. The EACOP shareholding is still open for any such parties,” noted Muloni.
On his part, Prof. Sospeter Muhongo, the Tanzania Minister of Minerals emphasized his government’s commitment to the EACOP noting that “pipelines” were not alien to them.
Muhongo says it is now time to kick start serious preparations in anticipation of the humongous work that awaits the two countries. He also offered some local content participation advice, urging Ugandans to identify entry points on the long value chain, within which they can offer their services.
Front End Engineering Design - FEED is basic engineering that comes after the conceptual design or feasibility study. It focuses on the technical requirements as well as rough investment cost for the project. The FEED can be divided into separate packages covering different portions of the project; the FEED package is used as the basis for bidding the execution Phase Contracts (EPC, EPCI etc) and is used as the design basis.
A good FEED will reflect all the client’s project specific requirements and avoid significant changes during the execution phase. FEED contracts usually take around 1 year to complete for larger sized projects. During the FEED phase there is close communication between Project Owners and Operators and the Engineering Contractor to work up the project specific requirements.
Hon. Irene Muloni, the Minister for Energy & Mineral Development says the next three years will see an investment of over $8bn flowing into Uganda with up to 160,000 jobs to be created. As such Ugandans needed to build capacity in time to benefit from the opportunities that were opening up.