Energy ministry creating oil institutions

By Ibrahim Kasita

UGANDA is silently restructuring the new entities that will manage the nascent oil and gas industry following the passing two critical Bills –the Petroleum (Exploration, Development and Production) Act and the Petroleum (Refining, Gas Conversion, Transportation and Storage) Act.

This is in line with National Oil and Gas Policy for Uganda 2008, which recommended that the roles of regulation, policy setting and commercial aspect being undertaken by the Ministry of Energy and Mineral Development are separated.

The new laws provide for the creation of a Petroleum Authority to regulate the sector and National Oil Company to spearhead the Government’s commercial interest in the oil sector. 

The energy ministry will be the policymaker and promoter of the sector. This management framework will separate policy setting, regulation of the industry and execution of the commercial aspects.

A transitional unit for the proposed institutions is being put in place, according to Peter Lokeris, the state minister for minerals.

“Structures for these institutions have been identified and the ministry is in the process of putting in place transitional units using the current staff in order to prepare adequately for these institutions once the bills are passed into law.” 

After confirmation of the significant commercial petroleum reserves in 2006 in the Lake Albert basin, the energy ministry embarked on the formulation of the National Oil and Gas Policy for Uganda.

The process involved policymakers, civil society, media, lawmakers, religious and opinion leaders and communities in the oil-rich areas. 

Stakeholders’ comments and view were captured in the document that the Cabinet approved on January 30, 2008. The policy goal 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 identifies issues arising as a result of the discovery of commercial oil and gas resources and the guiding principles for the exploitation of the new finds. 

Plans are underway to transform the newly discovered oil and gas assets to monetary assets to contribute to early achievement of poverty eradication and create lasting value to society.

This is after proven reserves of 3.5 billion barrels of oil equivalent were confirmed in Uganda’s Lake Albert basin over and above the threshold for commercial production. And analysts have valued the petroleum assets to be about $400b in monetary terms. 

However, authorities are planning how to optimally extract the crude oil and gas and the resource rent. 

A five-phase development strategy has been adopted with the first phase referred to as “Early Commercialisation” in the period 2012-2015.

The second phase is to start with a small refinery with capacity to process 20,000 barrels of oil per day (bpd) in the period 2015-2017.

The third phase is to upgrade the refinery to the capacity of processing 60,000 bpd from the period 2017-2022.

The fourth phase is upgrading the refinery to 120,000 bpd in the period 2022-2030. The fifth phase is to build an export pipeline of 300,000 bpd is constructed from Lake Albert to Port Mombasa.