Uganda''s oil industry is at ''most lucrative phase''

 

KAMPALA - Uganda oil industry has entered the most crucial and most lucrative phase, energy ministry officials have said.

“The development phase is the most crucial and lucrative,” said Fred Kabanda, a principal geologist in the energy ministry, at a Wednesday news conference at Hotel Africana in Kampala.

 

Other energy ministry officials included Ernest Rubondo, the commissioner for petroleum exploration and production department and Irene Batebe, a petroleum officer. They explained that the country’s oil industry was entering the “busiest phase”.

 

This phase involves preparation of the oil fields for production and establishment of the necessary infrastructure for production to commence. It is during the development phase that manpower requirements are at their peak. Production is expected to start 2018. 

 

Rubondo explained that $10b (about sh26trillion) is required for the oil industry development and $3b (over sh7trillion) will be invested in the industry by the end of this year.

 

There are plans to establish a refinery in Kabale, an oil pipeline for transporting refined petroleum from Hoima to Kampala and two power plants to generate a total of 100mw for the two Central Processing Facilities (CPF) that are going to be set up. 

 

The refinery will cost between $3.5b and $4b (over sh8trillion) and will have a capacity to refine 60,000 barrels of oil per day, according to the officials. The Government is negotiating with two companies, SK Group from South Korea and RT-Global Resources from Russia, for the refinery contract. The winner will be announced by the end of this year. 

 

“By the end of 2014, the Government will announce the firm that we will work with under the Public-Private-Partnership (Government 40% and the company 60%),” Batebe said.

 

Kabanda said two Central Processing Facilities would be built at Buliisa and Kingfisher oil development areas, each with a power plant to generate electricity from gas. “The 35mw would be generated at Kingfisher and 7mw at Buliisa,” he said, adding that nine more oil rigs would be erected at the sites and 80 people would be required per rig (a large structure with facilities to drill wells, extract and process oil and natural gas). 

 

The two CPFs are meant for the preliminary purification of the oil before it is taken to the refinery. The crude oil is supposed to be pumped to the CPF from the various wells through a network of pipelines. A total of 700 wells shall be drilled.

 

According to the officials, plans are underway to establish huge oil storage tanks with a capacity of 250,000 barrels of oil. 

 

In addition, an airport will be built in Hoima and it will be implemented in two phases. During the first phase, an airstrip will be built and later be upgraded to an international airport.

 

Batebe also explained that there are plans to construct a multi-product oil pipeline from Eldoret in Kenya to Uganda. The pipeline will at first be used for refined petroleum to Uganda, but may also in future be used to transport refined petroleum from Uganda to Kenya. 

 

In addition, there are plans to construct a pipeline for oil export. Three proposals are under consideration. One of the proposals is to construct a 1,380km pipeline through Lamu Port. Another is for a 1,300km pipeline through Mombasa and the third proposal is for a 1,950km pipeline through Dar-es-Salaam in Tanzania.