“China brushes off environment fears over East Africa pipeline”

Two Chinese state-owned companies have started building onshore facilities for an oil field in western Uganda, despite environmental concerns and financing issues with the project.

The joint venture between Offshore Oil Engineering Co. and China Petroleum Engineering & Construction Corp. is part of the East African Crude Oil Pipeline Project, which will transport oil pumped in Uganda to the port of Tanga in Tanzania for export.

But the developers face opposition from residents, as well as environmental and climate-change advocacy groups. They are also struggling to obtain $3 billion in loan financing to complete the project.

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Chinese oil companies are pouring money into exploring for and producing oil and gas in Africa. More than 25% of China's oil and gas imports come from Africa, which is its second-largest source of supply, after the Middle East. China's growing demand for energy has spurred its effort to diversify the countries it imports from, and its upstream reach has significantly increased to include nearly 20 African countries.

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Opponents of the pipeline worry that Uganda's oil production may have a similar effect as in Nigeria, where over half the country's oil earnings might soon be needed just to clean up the environmental damage from oil production.