Uganda eyes first oil barrel

PETROLEUM           NEMA

Uganda eyes first oil barrel The country is making strides in preparing to get its first barrel of oil and export crude oil by pipeline through Tanzania.

Uganda plans to refine portions of its oil for local use through the first national refinery in Hoima district. First oil requires a refinery or an export pipeline. It takes three years to construct a refinery or a pipeline after the Final Investment Decision is made (FID).

If FID, a point where the decision is made to award big construction contracts and to finance them is made this year, the first oil barrel is expected in 2022 according to experts. So far, the country has discovered six billion barrels of oil of which 1.4 billion barrels can be recovered and 500 billion cubic feet of gas.

Eng. Irene Muloni, the former Minister for Energy and Mineral Development, said the resources have been confirmed in the 21 oil and gas discoveries which have been made. Licences issued She said nine production licences have so far been issued to Total E&P Uganda, CNOOC (U) Ltd and Tullow Uganda Operations Pty Ltd.

Oranto Petroleum Ltd and Armor Energy Pty Ltd who got exploration licences are still carrying out seismic surveys. The Environmental and Social Impact Assessment (ESIA) for two upstream projects of Tilenga and Kingfisher, containing oil fields and facilities, has been completed.

The ESIA for the Tilenga Project was approved by NEMA while the one for Kingfisher was in the final review stages. Muloni said in order to attract more investment in the upstream sub-sector, the second licensing round was launched at the East African Petroleum Conference and Exhibition 2019 in Mombasa.

Muloni said the ministry has also carried out studies in the Moroto-Kadam Basin and found prospects of oil and gas. Refinery development Muloni explained that the US lead investor Albertine Graben Refinery Consortium (AGRC) is still progressing with the Front End Engineering Design (FEED) studies that will inform the Final Investment Decision of the refinery project.

Meanwhile, negotiations on the appointment of the FEED operator and management commenced. Hoima airport The ministry is monitoring the construction of the Hoima International Airport whose works have progressed to about 28%. This airport shall facilitate the movement of heavy equipment and goods for the refinery construction.

Petroleum distribution Regarding petroleum supply and distribution (downstream), Muloni said this sector has been stable with all the products such as jet fuel, kerosene, diesel and petrol being available. She said the total national annual consumption of petroleum products stands at 2.1 billion litres.

Regarding efforts to increase usage of liquefied petroleum gas (LPG) from the current 0.8% to 20% at the household level, Muloni said the pre-feasibility study on LPG supply, promotion, and infrastructure intervention and have embarked on the detailed feasibility study.

She said during FY 2018/19, 152 companies were issued with downstream petroleum operating licences and 329 petroleum construction permits were issued. Furthermore, 101 construction completion certificates were issued to developers of petroleum facilities in the country.

Muloni noted that rigorous quality monitoring was sustained and compliance level with respect to petrol and diesel was at an average of 99.4%. Ernest Rubondo, the executive director, Petroleum Authority of Uganda said Ugandan businesses such as hotels, law firms, land surveyors, transport, construction companies, those involved in geotechnical studies got about 28% from oil exploration expenditures where over $900m was incurred.

"For the oil and gas sector to spur inclusive growth, deliberate efforts have to be made to enable the benefits from the sector reach the wider population," Rubondo said. Following the launch of the East African Crude oil export pipeline (EACOP), negotiations of the Host Government Agreement (HGA) between the Government of Uganda and the Joint Venture Partners are in advanced stages.

In addition, the Resettlement Action Plan (RAP) across the 10 districts where the pipeline will pass, the Engineering Procurement Construction (EPC) for the FEED validation and EIA for the EACOP development are being taken forward.

The Hoima-Kampala refined petroleum products pipeline traverses seven districts to the Kampala Storage Terminal. The valuation reports for the land acquisition process for the infrastructure corridor were submitted to the Chief Government Valuer (CGV) for clearance and thereafter begin compensation of Project Affected Persons (PAPs).

Another important project includes the natural gas pipeline from Tanzania to Uganda whose joint feasibility study will commence after approval by the two states.