This is an audio transcript of the Behind the Money podcast episode: Inside the fight to stop an oil pipeline in Africa

Michela Tindera
Earlier this year, there was a big celebration at a park in Uganda’s capital city, Kampala. It lasted more than three hours. There were speeches from dignitaries, business executives and religious leaders.

News clip
We thank you for this historical gathering of today.

Michela Tindera
And there were dance performances . . . 

[MUSIC PLAYING]

Michela Tindera
And the main reason for all of this pomp and circumstance was that after years of work, four oil companies, the French oil and gas company TotalEnergies, the Chinese state oil company Cnooc and the national oil companies of Tanzania and Uganda, they had all come together and finally reached an agreement to develop Uganda’s oilfields and build what’s known as the East African Crude Oil Pipeline or EACOP for short.

News clip
For me, today is definitely a day of happiness. This project is a very important one. We are confident that Uganda and the United Republic of Tanzania will benefit from this project and the profits from the industry will contribute to eradication of poverty and create lasting value to society.

Leslie Hook
This is going to be the world’s longest heated pipeline running from Uganda through Tanzania and to the coast.

Michela Tindera
That’s Leslie Hook. She’s the natural resources editor for the FT.

Leslie Hook
And the oil is going to come out of the ground in a couple of different places. There’s two main developments in the western side of Uganda and then pipeline will go through Uganda, just below the bottom of Lake Victoria, through Tanzania and, and to the coast. And it’s a really big project and it’s really significant because it will turn Uganda into an oil producing country and an oil exporting country for the very first time.

Michela Tindera
The Ugandan and Tanzanian governments are thrilled about it. They see it as a way to finally bring their economies into the 21st century with nearby access to oil and gas. On the other hand, environmental activists are worried. Plans for the pipeline include running through a national park in Uganda and displacing local people from their homes. One environmental campaigner told Leslie that it’s “really the worst project that you could imagine”.

Leslie Hook
The risk of oil spills, the disruption posed by construction, having heavy equipment are really significant. And so you’ve seen kind of a coalition of environmental groups that are really trying to call out this project, expose the impact that it’s having, and they’re trying to stop it.

Michela Tindera
In fact, Leslie found that some environmentalists are taking a new approach to fighting this oil project. The project is expected to cost $10bn, and the companies behind it are still looking for funding from external parties to make that happen. And this has opened up a new window for environmental activists to focus their campaigns. So rather than just placing pressure on the companies in charge of building the pipeline, they’re putting pressure on financial institutions. They’re trying to convince these financial institutions that they shouldn’t provide these oil companies with the funding and insurance that they need to pull off the project.

Leslie Hook
So if you think of, you know, some of the iconic environmental campaigns of the past, like in the 1970s, you had anti-whaling campaigners and they’re on boats. And there’s these really iconic photographs. And that campaign was really effective. You know, whaling did get banned in the 1980s. And I think of this as like a modern day equivalent. This is a new approach and it’s an idea, the idea of focusing on financial institutions. This idea is really gaining a lot of traction.

Michela Tindera
This tactic is one that could impact not only EACOP over the next few years, but it could also lay out a blueprint for environmental activists targeting other fossil fuel projects in the future.

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Michela Tindera
I’m Michela Tindera from the Financial Times. On this week’s episode of Behind the Money, how environmental activists are targeting banks and insurers to fight the construction of an oil pipeline in Africa.

[MUSIC FADES]

Michela Tindera
For decades, the possibility of extracting oil from the earth in Uganda has been there, just out of reach.

Leslie Hook
So in this part of western Uganda, oil seepages were actually observed on the ground more than a century ago. And geologists could see the oil at the surface, seemed like there is something there, but no one could really find the deposit and determine whether there was a reserve that would be economic to produce, to pump out of the ground.

Michela Tindera
The president of Uganda, Yoweri Museveni, has been in power since the 1980s, and he’s had his sights set on this for a long time.

Leslie Hook
He wanted to understand what was the potential of Uganda to produce oil and to sell oil and to export it.

Michela Tindera
Finally in 2006 after drilling many test wells, a formal oil discovery was made. A place where they could drill and access oil. But still, there have been some delays.

Leslie Hook
So even though this oil was discovered in 2006, it’s taken a long time to get these projects going because of the huge environmental risks involved and the environmental impact assessments that were done took years.

Michela Tindera
One part of the oil project is set to be built inside what many consider to be the crown jewel of Uganda’s park system, Murchison Falls National Park.

Leslie Hook
It’s two and a half times the size of Greater London, and it’s home to hippos and giraffes, elephants, lions, warthogs and Uganda calves, which are like a form of antelope. It’s just this oasis of, it’s a sanctuary for wildlife. And it’s been protected for decades.

Michela Tindera
Leslie travelled to Murchison Falls earlier this year to see firsthand how this oil project might impact the area.

Leslie Hook
When you arrive in Murchison Falls National Park, you immediately see that there’s this huge highway that cuts right through the middle of the park, and in some places it’s been finished, in some ways it’s still under construction. So you can see these bulldozers and this really noisy, heavy equipment that is just ploughing right through the centre of the park. Part of the reason this road is being built is to allow oil equipment and construction equipment to get inside the park more easily. And one very telling indication is that this road doesn’t have any speed bumps. And most highways in Uganda have a lot of speed bumps as a safety measure, but not this one.

Michela Tindera
A spokesperson for the French oil company developing this project, TotalEnergies, told the FT that the pipeline route was designed to minimise its environmental impact and avoid sensitive habitats as much as possible. Still, along with the environmental risks, there’s another issue with the incoming pipeline, too.

Leslie Hook
So for the people that live near these projects and near the pipeline, it is quite disruptive. This pipeline is being built in an area that has a lot of people living there already.

Michela Tindera
In fact, there’s more than 10,000 people who will be impacted by the construction of the project, and many will be forced to move.

Leslie Hook
And the companies involved have offered compensation for the land. In some cases, that’s been rejected. There have been a number of complaints about the level of compensation that’s been offered to the landowners and the farmers that have been living there. So the question of what is the future of these displaced people is still a very big one.

Michela Tindera
When Leslie travelled to Uganda, she met one of those people who disagreed with the amount of compensation he was offered. His name is Nelson Tibemanya.

[Sound of footsteps on land]

Leslie Hook
Nelson is a farmer, and he lives south of Murchison Falls National Park. He works on the land, the same farm that’s been in his family, the land where he was born. And the pipeline is going to pass right through his front porch. So he’s going to lose his house. And he was offered compensation by the companies building the pipeline, but he felt like this was too low because they undervalued his trees.

And is this your forest?

Nelson Tibemanya
Yes, my forest. Not all . . . 

Leslie Hook
It’s a big area.

Leslie Hook
He took me on a walk through his property and through his farm, and he just showed me his trees, which had been growing there. And they were as big as, you know, telephone poles. He said they had been valued like trees that were the sort that you would use in construction work and had been valued as being smaller than, than they were.

[Sound of footsteps on land]

Leslie Hook
And so he’s rejected that compensation offer and has been going back and forth for years since 2019 but hasn’t gotten a better offer.

Michela Tindera
Even with all these complications, the governments of Uganda and Tanzania see the pipeline as a huge opportunity.

Leslie Hook
I’ve spoken to Ugandan government officials and they say, look, this is our chance to develop, and we deserve to have this opportunity for economic development just like you guys had in the west. And their argument is that the revenue that they get from selling oil will help Uganda to provide better social services and better infrastructure and even lower emissions. So today, Uganda imports most of its oil via Kenya, and that gets trucked in. So it has very high emissions. Once this project is built, Uganda will become a producer of oil, of course, and there will be a small domestic refinery. So about a quarter of the oil that’s produced from this project will be refined domestically and stay in Uganda and meeting its needs. So their argument is that this new process will result in less emissions than the current system.

Michela Tindera
But the environmentalists aren’t buying this talk of lower emissions oil production.

Leslie Hook
They’ve all come together in this loose coalition called Stop EACOP, which just kind of rhymes. And the Stop EACOP campaign has over a dozen different groups that contribute to it, support it and are kind of loosely affiliated with these efforts. And the reason that the campaign is so interesting is because it really targets the financial institutions that are involved with this project, both banks and insurers. And to me, this seems like kind of a, a new model. You know, rather than throwing yourself in front of the bulldozer, these groups are organising a campaign to ask major banks not to fund this project and to campaign to ask big insurers not to insure this project. And so, one by one, over the last couple of years, we’ve actually seen them have a degree of success.

Michela Tindera
One member of this effort is Coleen Scott. Coleen’s a legal and policy associate at a non-profit called Inclusive Development International or IDI.

Coleen Scott
So EACOP is certainly not our first case using the follow the money approach. IDI was started in Cambodia.

Michela Tindera
IDI started this approach when the co-founders of the organisation were living in Cambodia. And Coleen says that they observed the government granting land concessions to various corporations which displaced farmers and other communities.

Coleen Scott
What they sort of discovered is that, you know, you can do so much work on the ground looking at the project’s impacts, engaging with the companies that you see operating on the ground, engaging with the government. But you’re hard-pressed to gain any traction just with doing that. What you really need to do is look beyond those immediate actors that you see on the ground and look internationally at the scope of, of actors in the financial system that are really enabling the project and hold leverage over the project success. And so that’s when they started to sort of look at banks, actors like shareholders and companies looking at the supply chain to see which brands would eventually source from the project in question. And that’s when the follow the money approach was created and launched. And since then, we’ve taken requests and researched more than 200 projects from around the world.

Michela Tindera
Coleen says that IDI was eager to take what they call their follow the money approach and apply it to EACOP. That’s because other campaigns that they’ve worked on in the past have been for things like mining projects that have been in existence for many years, whereas EACOP is still in the developmental stages now. So Coleen says that they started out by looking at the banks and other places that might provide funding or financial support to the oil companies that are actually building the oil project.

Coleen Scott
We found that they plan to finance it with what’s called a 60-40 debt to equity split. That means that 60 per cent of the total cost will come in the form of a project loan provided by banks. And 40 per cent of that cost will come from the equity investors. In this case, that’s Total from France, Cnooc, the Chinese company, and the national oil companies of Uganda and Tanzania. And so we really focused in on this financing structure, and we essentially figured out that if we can stop this project loan, that’s 60 per cent of the total cost of the project. It would be really difficult, if not impossible, for the project sponsors to move ahead without that project loan. So that’s when we got in touch with groups like BankTrack, which is a Dutch organisation that focuses on commercial bank advocacy. And we got them involved, and we started really launching this, this finance advocacy campaign targeting banks that we thought were the most likely actors to finance the project.

Michela Tindera
Then Coleen says that they drew up a list of about 30 commercial banks that they knew had existing financial relationships with Cnooc and Total.

Coleen Scott
And we made that list because we figured, OK, if they’re looking for banks to join this project loan, these are the most likely candidates that they’ll approach to join the loan, and these are the most likely ones that would agree because they already are familiar with the project or with the, with the company. And so based on that list, that was our sort of universal of starting points where we started writing to those banks. We started highlighting the risks, familiarising them with the project from our perspective and asking them to make a clear commitment that they would not finance the project.

Michela Tindera
At first, Coleen says that it was pretty tough to get these banks to even respond. Let alone actually make a commitment that they wouldn’t provide financing for the project.

Coleen Scott
I think most advocates who work in this space can tell you that the first response you will always get from a bank is, we can’t talk about this. It’s commercially sensitive. We can’t comment on particular clients or particular projects. But, you know, we’ve seen since then that they can and they will if they feel hard-pressed to do so.

Michela Tindera
So with help from BankTrack and local partners in Uganda, in March of 2021 the first two commercial banks came out to publicly say that they wouldn’t finance EACOP, and those banks were Barclays and Credit Suisse. Since then, Coleen says that they’ve been able to get a total of 20 banks to come out publicly to say that they won’t finance the pipeline. And that includes major names like JPMorgan, Citigroup, Wells Fargo and Morgan Stanley.

Coleen Scott
We publicised the list of banks that we were engaging with. So we created a massive campaign website stopeacop.com. And on that website we had a page dedicated to setting out who are the banks that we’re targeting and what are their responses so far. So every time we reached out to them and got a response, we would publicise what they said to us, and we would publicly track their position in relation to EACOP. And that served to sort of create public pressure, public visibility focused on the banks. And ultimately I think that that contributed to the success in getting so many banks to follow suit.

Michela Tindera
Getting the banks to make a commitment isn’t the only piece of this campaign, though.

Omar Elmawi
So my name is Omar Elmawi. I work as the co-ordinator of the Stop East Africa Pipeline campaign. So this campaign is an important piece for what they believe in, which is an Africa that is fossil free and leapfrogs fossil fuels towards renewable, green, renewable energy.

Michela Tindera
Omar grew up in Kenya, but he says that once he found out about what was happening in Uganda with the oil pipeline, he decided he wanted to help people there fight against the production of this thing. His Stop EACOP campaign has focused on the banks, but there’s another piece to this too.

Omar Elmawi
Importantly, you know, the money is not everything that they need, but they also, because it’s a risky project, it’s going to cause huge, devastating impacts. They will need an insurer to underwrite it.

Michela Tindera
Major infrastructure projects like EACOP have insurance that covers risks, and that could include things like oil spills or construction risk.

Omar Elmawi
It’s the reason why we’ve also targeted different insurance companies and reinsurers to make sure that this project never gets the underwriting that it needs for, for them to get the insurance to proceed with it.

Michela Tindera
Omar says that the Stop EACOP campaign has targeted roughly two dozen insurers, and about a dozen have confirmed that they will not get involved with the project.

Omar Elmawi
But we do know that all of these commitments and all of these all of these commitments that are being made, it’s not because, you know, these people are feeling sorry for the community, but because they’ve done the assessments, they’ve looked at all the agreements we’ve made, and they’ve came to a pretty good position in landing, where they realised that being exposed to EACOP is not the best way for them to continue with the work that they need to do. So hopefully, you know, the list can only really only go longer going forward.

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Michela Tindera
Despite these efforts, at least one major insurance company has signed on to support the project.

Leslie Hook
In May . . .

Michela Tindera
That’s Leslie again.

Leslie Hook
We reported at the FT in collaboration with the Bureau of Investigative Journalism that one of the biggest insurance groups in the world, Marsh McLennan, had actually signed on to provide reinsurance to this project. And they decided to do that in spite of the fact that they had employees asking them not to because of the significant environmental impacts and risks that the project presented. But based on what we know today, the project is still progressing. The pipeline is going to be built. And when I visited the central processing facility in the Buliisa area of Uganda, you know, the ground was being prepared. There’s trucks going in and out. You really get a sense that things are happening, and this project appears to be going forward. But we don’t know yet who will be funding it. By targeting these financial institutions, the campaigners are making it more difficult and more costly for this project to get backing and to get off the ground. Now, it’s still not impossible. And it looks likely that this project will ultimately receive financing likely from Chinese banks, maybe Japanese banks and African banks. We don’t know who will end up financing it yet, but it does seem like they’ll be able to access capital from other sources. But the campaign, by targeting financial institutions, has made it more difficult and sort of more embarrassing, if you will, to raise the money they need to develop this project and to build the pipeline.

Michela Tindera
A spokesperson for Total told the FT that they’re actively working on the project’s financing with a pool of western, Asian and African banks. They said that they expect the financing process and due diligence to be completed later this year. Even if these efforts aren’t successful for EACOP, Coleen Scott, who we met earlier, believes that this work has the potential to leave an impact on future projects down the line.

Coleen Scott
I think, yes, you’re seeing more and more projects, campaigns of this size and scale, really focusing in on that finance advocacy piece and realising how crucial it is to ensure that the money is not in place for these projects to move forward. And I think that there’s also a changing trend within the financial industry, where banks and insurers are becoming more used to becoming targets of this sort of advocacy. And they’re sensitive to those risks. They don’t want to be seen as, as the laggards in their industry.

[MUSIC PLAYING]

Michela Tindera
Behind the Money is hosted by me, Michela Tindera. This episode was edited by John Buckley. Topher Forhecz and Manuela Saragosa are our executive producers. Sound design and mixing by Sam Giovinco. Cheryl Brumley is the global head of audio. Thanks for listening. See you next week.

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