Italian giant still wants oil fields
Nov 29, 2010
ITALIAN oil giant, Eni Spa, is still interested in venturing into Uganda’s oil fields, stiffening competition in the nascent oil and gas industry.
By Ibrahim Kasita
ITALIAN oil giant, Eni Spa, is still interested in venturing into Uganda’s oil fields, stiffening competition in the nascent oil and gas industry.
Experts predict thi will offer strong investment opportunity for the industry.
The Milan and New York listed firm is expecting to meet President Yoweri Museveni to restore their interest to play a significant role in the development of the oil sector in Uganda.
“Your request to seek appointment to see His Excellency was forwarded to me by his principal private secretary to coordinate the meeting,†Hilary Onek, the energy minister, stated in a letter dated November 10.
The letter was addressed to Paolo Scaroni, the Eni Spa chief executive officer, but also copied to the principal private secretary to the President and Eng. Claudio De Scalzi, the Eni chief operating officer.
“I have now requested H.E to meet you any day at his convenience and will communicate to you after confirmation from his office,†the minister’s letter added.
“I am glad that you have continued to show interest in our country,†Onek stated.
This will not be the first time this major integrated energy company is expressing desire to participate in Uganda’s oil and gas industry.
The Rome headquartered company was the first to enter into a sales and purchase agreement for the acquisition of Heritage’s 50% interest in blocks 1 and 3A at $1.35b.
However, Eni had to legally “withdraw†from the transaction after another UK firm, Tullow, a 50% co-owner of the blocks pre-empted the deal, which was perceived in some quarters to send a contradictory message.
Eni’s desire to re-engage Uganda comes at a time when Tullow is embroiled in $404m tax dispute with Uganda.
Uganda blames Tullow for paying Heritage $1.5b without approving its consent.
The Government has not renewed Tullow’s recently expired licence for block 3A.
Eni’s interest, however, is not limited to this block, but also to any other unlicensed exploration blocks competent authorities see as fitting their hydrocarbons development intentions.
Uganda’s oil and gas operations are moving into the development and production stages, which require the necessary risk capital, access to project finance and long-term investment.
Power generation and transmission facilities may cost $300m, oil processing and transportation equipment $1.5b, refinery development $2b, further drilling $200m and expanded storage and pipeline infrastructure $4b.
Uganda wants to license several oil firms to avoid a monopoly.
The firms must also support the Government’s development strategies, including early commercialisation of the oil resources, value-addition and training of Ugandans in oil-related activities and processing.
This calls for a strong operating experience in refining and pipeline development, which, experts say, Eni has developed over the years.
Uganda has confirmed significant oil reserves in the Lake Albert basin.
It is estimated that the basin has 2.5 billion barrels of commercially-viable crude oil. Oil production at peak will produce around 200,000 to 300,000 barrels of oil per day.
At the current prices of about $72 per barrel, Uganda could earn about $2.5b in oil revenues alone that could equal the current government revenues.
Already, the country is in the process of soliciting investors to build a refinery and associated pipelines in efforts to add-value and create jobs opportunities.
ITALIAN oil giant, Eni Spa, is still interested in venturing into Uganda’s oil fields, stiffening competition in the nascent oil and gas industry.
Experts predict thi will offer strong investment opportunity for the industry.
The Milan and New York listed firm is expecting to meet President Yoweri Museveni to restore their interest to play a significant role in the development of the oil sector in Uganda.
“Your request to seek appointment to see His Excellency was forwarded to me by his principal private secretary to coordinate the meeting,†Hilary Onek, the energy minister, stated in a letter dated November 10.
The letter was addressed to Paolo Scaroni, the Eni Spa chief executive officer, but also copied to the principal private secretary to the President and Eng. Claudio De Scalzi, the Eni chief operating officer.
“I have now requested H.E to meet you any day at his convenience and will communicate to you after confirmation from his office,†the minister’s letter added.
“I am glad that you have continued to show interest in our country,†Onek stated.
This will not be the first time this major integrated energy company is expressing desire to participate in Uganda’s oil and gas industry.
The Rome headquartered company was the first to enter into a sales and purchase agreement for the acquisition of Heritage’s 50% interest in blocks 1 and 3A at $1.35b.
However, Eni had to legally “withdraw†from the transaction after another UK firm, Tullow, a 50% co-owner of the blocks pre-empted the deal, which was perceived in some quarters to send a contradictory message.
Eni’s desire to re-engage Uganda comes at a time when Tullow is embroiled in $404m tax dispute with Uganda.
Uganda blames Tullow for paying Heritage $1.5b without approving its consent.
The Government has not renewed Tullow’s recently expired licence for block 3A.
Eni’s interest, however, is not limited to this block, but also to any other unlicensed exploration blocks competent authorities see as fitting their hydrocarbons development intentions.
Uganda’s oil and gas operations are moving into the development and production stages, which require the necessary risk capital, access to project finance and long-term investment.
Power generation and transmission facilities may cost $300m, oil processing and transportation equipment $1.5b, refinery development $2b, further drilling $200m and expanded storage and pipeline infrastructure $4b.
Uganda wants to license several oil firms to avoid a monopoly.
The firms must also support the Government’s development strategies, including early commercialisation of the oil resources, value-addition and training of Ugandans in oil-related activities and processing.
This calls for a strong operating experience in refining and pipeline development, which, experts say, Eni has developed over the years.
Uganda has confirmed significant oil reserves in the Lake Albert basin.
It is estimated that the basin has 2.5 billion barrels of commercially-viable crude oil. Oil production at peak will produce around 200,000 to 300,000 barrels of oil per day.
At the current prices of about $72 per barrel, Uganda could earn about $2.5b in oil revenues alone that could equal the current government revenues.
Already, the country is in the process of soliciting investors to build a refinery and associated pipelines in efforts to add-value and create jobs opportunities.