National
Firms agree on oil value addition
Publish Date: Feb 09, 2014
Firms agree on oil value addition
Irene Muloni, the minister of energy and mineral development
  • mail
  • img
newvision

By Ibrahim Kasita

The joint venture exploration and production partnership of Tullow, CNOOC Uganda and Total have finally accepted to support Uganda’s petroleum value addition road map that could cost between $7b and $9b investment.


The partners decided on a plan to use oil and gas assets for electricity production.

The firms have also accepted to supply crude oil to the refinery before considering exporting it.

“The memorandum of understanding requires the oil companies to support the Government in its efforts to develop the refinery including public endorsement of the project,” Irene Muloni, the minister of energy and mineral development said.

She affirmed that before the refinery is constructed and commissioned, the oil companies will supply crude oil from the contact areas to be used for power generation.

“Excess associated and non-associated gas will be used for power generation or any other viable options,” the minister stressed.

President Yoweri Museveni urged the oil firms to “move fast” because Ugandans have waited for long to see the first oil production.

“We as Ugandans are a bit impatient because we want to use the oil money for the development of infrastructure,” he said in a statement yesterday.

“I call upon the oil companies to be fast so as to revamp the economy of Uganda. Oil is important. We want fast development in order to go to double digits in the growth of Uganda’s economic growth (GDP) of 11 and 12.”

The agreement follows protracted negotiations between the joint venture partnership and the Government that delayed the signing of the memorandum that was expected in late September when the first production license was issued for the Kingfisher field.

The Tullow-CNOOC-Total partnership has been against the refinery in favour of construction of the pipeline to the Indian Ocean to export the crude oil to the international market.

To ensure that a middle ground is reached, Uganda has softened its stance and agreed to provide support to the oil companies to acquire approvals for studies for an export pipeline.

The Government has also pledged to initiate discussions with neighbouring states in relation to a cross border framework for the pipeline.

This means that Uganda will develop the refinery with an input capacity of 60,000 barrels per day whereas the partners will develop a pipeline or any other viable options to export the crude.

“The refinery shall have the right of the first call on production volumes and from the licensed areas,” the minister asserted.

However, the agreement also provides for the expansion of the refinery beyond the 60,000 barrels per day in the event that additional resources
are confirmed in the licenced areas.

Uganda’s commercialisation plan is based on the current discovered recoverable reserves in the country estimated at a range of 1.2 to 1.7 billion barrels of crude oil.

Jimmy Mugerwa, the Tullow Uganda country general manager, said the delay in signing the deal was because the project involves “huge investments.”

“We are talking about close to $15b investment. Our boards had to think and discuss before making decision. It is huge investment,” he said.

But authorities indicate that the whole first phase of the commercialisation of the petroleum resources will cost between $7b and $9b.

Xiao Zongwei, the CNOOC Uganda general manager, pledged to “deliver the project as quickly as possible” to meet all stakeholders’ expectations. “It is our duty,” he said.

The statements, comments, or opinions expressed through the use of New Vision Online are those of their respective authors, who are solely responsible for them, and do not necessarily represent the views held by the staff and management of New Vision Online.

New Vision Online reserves the right to moderate, publish or delete a post without warning or consultation with the author.Find out why we moderate comments. For any questions please contact digital@newvision.co.ug

  • mail
  • img
blog comments powered by Disqus
Also In This Section
WHO eyes mass Ebola vaccines by mid-2015
Hundreds of thousands of Ebola vaccine doses could be rolled out to west Africa by the middle of 2015, the World Health Organization said Friday, after new cases of the virus were reported in New York and Mali....
KCCA demolishes structures in Wandegeya
Kampala Capital City Authority (KCCA) has demolished several illegal structures in Wandegeya in an operation which lasted for close to five hours....
Army chief urges youth on hard work
The Chief of Defence Forces, Gen. Katumba Wamala, has cautioned the youth against impatience urging them to devote their energies to productive activities. He said most youth spend time watching movies which have given them an illusion of a rather glamorous life...
Rakai launches campaign against teenage pregnancies
Rakai district has partnered with local charities to end child marriages. This follows reports of an increase in the rate of school dropout among girls.According to the Abubeker Lutaya, the Rakai district schools’ inspector, child marriages have contributed to girl child school dropout...
US Embassy empowers Kampala youth
Sports betting and gambling are fast becoming a serious challenge to youth employment in Kampala City since majority of losers in betting resort to crime including robbing and hitting people with iron bars....
‘Jamwa did not cause any financial loss to NSSF’
City lawyer Fred Mpanga has asked the Court of Appeal to acquit former NSSF managing director David Chandi Jamwa of abuse of office and causing financial loss....
Should diplomatic passports issued to ex-govt workers be with drawn?
Yes
No
Can't Say
follow us
subscribe to our news letter