By Bashir Hangi
The recent developments in Uganda’s Oil and Gas Sector are an indication that the country and its citizens are headed for a better future.
The goal of our National Oil and Gas Policy (2008) is “to use the country’s oil and gas resources to contribute to early achievement of poverty eradication and create lasting value to society”.
The Policy has 10 objectives, each with strategies and actions that must be implemented to achieve this goal.
In fulfillment of the policy objectives, a number of achievements have so far been made in the sector, which is a precursor to the success of the Oil Industry in Uganda
Two pieces of legislation; the Petroleum (Exploration, Development and Production) Act 2013 and Petroleum (Refining, Conversion, Transmission and Midstream Storage) Act 2013 were assented to by the President and became effective in April and July 2013 respectively.
This new legislation is crucial in taking forward oil and gas activities in the country. The former gives a firm legal foundation to all exploration, development and crude oil production activities while the later provides a legal backing to all aspects related to refining, transportation and storage of petroleum products to demand centres.
The two petroleum laws are important for the next round of licensing of exploration acreage and building a Greenfield refinery in the country. Both laws provide for licensing, environmental protection and decommissioning among other aspects of upstream and midstream activities.
The first petroleum production license in the country and the East African region took effect during September 2013. China National Offshore Oil Corporation (CNOOC) was issued a production license over the Kingfisher field and this opened the transitional period from exploration to development in preparation for production.
This is a milestone in the history of Uganda’s Oil and Gas Sector.
The public is awash with talk of when oil production will begin. For production to take place, the necessary infrastructure must be put in place. In Uganda, the policy clearly provides for refining of the crude oil resources to cater for national and regional demand for petroleum products.
In addition, all fields have to be developed by putting in place crude evacuation pipelines, processing hubs as well as other development and production infrastructure, which is done during the field development phase.
The feasibility study for refining in Uganda recommended Kabaale, Buseruka Sub County in Hoima District as the most suitable location for the refinery.
Through a resettlement action plan that was developed by the Government, payment of compensation to persons affected by land acquisition for the refinery development has commenced.
This demonstrates that the Government understands and respects the rights of people affected by oil and gas activities and that replacement cost for loss of property and/or land is in line with national legislations as well as international standards and best practices.
This approach does not only build good relations between government/oil companies undertaking oil and gas activities and the host communities but also earns government and partners a social license to operate in communities without fear for security of infrastructure put in place.
The planned 60,000 barrels per day refinery will require an investment of $4b and will be developed through a Public Private Partnership.
Out of over 70 companies that responded to a request for qualifications that was issued internationally in October 2013, six firms/consortia were shortlisted and issued a request for proposal to bid for the lead investor in Uganda’s refinery project.
The selection of the lead investor for the refinery is crucial because as production licenses are being issued, construction of the refinery will be taking place parallel to field development by the upstream oil companies.
The Public Finance Management Bill, which provides for petroleum revenue management currently in Parliament gives Ugandan’s an opportunity to make their input on how they want revenue from oil resources to be managed for the good of the country.
They can do this through their Members of Parliament or by seeking audience from the relevant committees.
The development of a Strategic Environment Assessment for Oil and Gas Activities in the Albertine Graben has been completed.
This together with other frameworks will contribute to improved Environment and Social Impact Assessments for the respective oil and gas activities in the area and ensure harmonious co-existence between these activities and the pristine environment in the Albertine Graben.
Finally, the signing of a memorandum of understanding between government and licensed oil companies marked in February this year is a major milestone in the commercialization of Uganda’s oil and gas resources.
The MoU provides a framework for achieving a harmonised commercialisation plan for the development of the discovered oil and gas resources in the country.
The plan include the use of petroleum for power generation, supply of Crude Oil to the refinery and export of Crude Oil through an export pipeline or any other viable options to be developed by the oil companies.
The highlighted developments are a clear indicator of good preparation being undertaken to ensure efficient and sustainable utilisation of the country’s oil resources for the benefit of the citizens of Uganda.
The writer is a communications office with the ministry of Energy and Mineral Development (Petroleum Exploration and Production Department)