The governments in Kampala and Dodoma joined oil companies Total of France and CNOOC of China in signing a series of accords Sunday that pave the way for the construction of a pipeline to carry crude from Uganda to a Tanzanian port on the Indian Ocean, official sources said.

The $3.5 billion (3 billion euros) project led by Total and CNOOC provides for the management of oilfields in the Lake Albert region in Uganda's west and proposes pumping the crude to the coast across Tanzania via the East African Crude Oil Pipe Line (EACOP).

The discovery of the crude reserves in 2006 sparked hopes in Uganda that the country could become an oil Eldorado, but drilling and pipeline projects failed in the face of commercial and tax disputes.

A joint press release says the agreements signed on Sunday by Uganda president Yoweri Museveni and his Tanzanian counterpart Samia Suluhu Hassan mean "all outstanding issues related to the EACOP Project have been amicably resolved".

It also stipulated that a shareholding agreement had been reached and that companies could now award construction contracts.

Beneath the waters and on the banks of Lake Albert, a 160 kilometre natural border separating Uganda from the Democratic Republic of the Congo, lie some 6.5 billion barrels of crude, of which about 1.4 billion barrels are currently accessible.

The Uganda reserves could last 25 to 30 years with a peak production of 230,000 barrels per day.

The EACOP is a heated pipeline stretching 1,400 kilometres (900 miles), including a 300 km (180 mile) stretch within Uganda, that will carry the crude to the Tanzanian port of Tanga.

On March 1, more than 250 local and international organisations addressed major banks in a letter calling upon them to refrain from financing "the longest heated crude oil pipeline in the world".

The letter cites "extensively documented risks" including "impacts to local people through physical displacement ... risks to water, biodiversity and natural habitats; as well as unlocking a new source of carbon emissions".

gm-fal/sst/nrh/lc

TOTAL

CNOOC

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