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Govt to train more oil experts

By Vision Reporter

Added 8th June 2010 03:00 AM

THE Government has shifted its focus in the oil and gas sector from exploration to training of experts, making of policies and laws to regulate the emerging industry.

THE Government has shifted its focus in the oil and gas sector from exploration to training of experts, making of policies and laws to regulate the emerging industry.

By ibrahim kasita

THE Government has shifted its focus in the oil and gas sector from exploration to training of experts, making of policies and laws to regulate the emerging industry.

This comes after pushing back the early oil production date to 2013. According to the budget framework paper for 2010 to 2015, the Government has allocated sh19.5b to the petroleum exploration and production department in the coming financial year.

“There is need for developing expertise in the oil and gas sector, create new institutions and setting up of systems for early production,” the document stated. The new institutions that will be created are the national petroleum authority, a directorate and a national oil company.

Uganda has confirmed the presence of two billion barrels of crude oil, raising the possibility of becoming one of the 50 top oil producing countries in the world when production starts in three years.

The country had expected to earn from the resource late last year, but disagreements on production, marketing and pricing delayed the venture which is expected to attract $2b revenue every year. President Yoweri Museveni wants the crude oil to be refined locally before it is exported, but the oil firms prefer exporting unprocessed oil.

Refining oil locally will create jobs for Ugandans, easing the high unemployment rate. Besides meeting the local energy demand for the major oil products, like kerosene, aviation fuel, diesel and petrol, there are also other by-products from oil that can be used in building roads and in making various products like plastics and jellies.

“The proposed budget and planned output for the next financial year will see regulations and guidelines for the upstream, mid-stream and downstream activities developed and a new petroleum law enacted,” the budget framework indicated.A Petroleum Bill, focusing on value-addition, will be prepared and implemented, mid-stream regulations and licensing framework for mid-stream activities will also be put in place.

The completion of a feasibility study for the development of an oil refinery is expected to be ready next financial year. Developers and financiers for the refinery project will also be identified in the same year.

Foster Wheeler Energy, a UK-based firm, secured the contract to carryout the feasibility study. The Government has introduced strict conditions for new companies interested in entering into Uganda’s oil and gas industry.

Any prospecting firm must have a capital base of at least $24b. This is because investment required in the short to long-term (2010-2020 is %8b.

The stringent restrictions come at a time when Uganda’s oil and gas operations are moving into the development and production phases. “Therefore, the type of companies required to carry these activities forward need to have the necessary risk capital and access to project finance for both the short and long-term investment,” Fred Kabagambe-Kaliisa, the energy ministry permanent secretary said.

“The companies must have good operator experience, not only in exploration and production of gas and oil but also in refining, pipeline development and operations.” Uganda’s early oil production is expected to be in form of power generation using oil and gas, which will cost more that $300m.

Oil processing and transportation equipment will cost another $1.5b, refinery development $2b, further drilling $200m and expanded storage and pipeline infrastructure $4b. There are giant oil companies like Eni, CNOOC and Total that have expressed interests to join the oil bonanza, which signifies benefits to the country. Eni, the Italian giant has a market capitalization of over $100m and experts believe the firm has the required experience and financial muscle to develop the oil resource in the Lake Albert basin.

Govt to train more oil experts

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