Friday February 7 2014

Government, oil firms tread murky waters on financing oil refinery, power plant

Tullow Uganda head of corporate affairs Conrad Nkutu (R) introduces general

Tullow Uganda head of corporate affairs Conrad Nkutu (R) introduces general manager Jimmy Mugerwa (L) Total Uganda general manager Loic Laurandel, 2nd L) and CNOOC Uganda Ltd president Zongwei (2nd R) after a press briefing on the agreement Uganda government signed with the three foreign oil companies at the Uganda Media Centre yesterday. The agreement clears the way for commercialisation of the country’s 3.5 billion barrels of crude reserves. PHOTO BY STEPHEN WANDERA 


Kampala - With the signing of the memorandum of understanding between the government and three oil companies, Uganda could benefit from investments worth $20 billion.

The Daily Monitor yesterday exclusively broke the news about the Wednesday night signing of the MoU at Entebbe State House between government officials and the companies’ top executives under the watch of President Museveni.

The key projects expected to be undertaken by the government and three companies, Tullow Oil PLC, CNOOC and Total E&P, are building a refinery, an export pipeline and crude-to-power plant.

Speaking at the Uganda Media Centre in Kampala yesterday, Energy Minister Irene Muloni said the agreement was a “significant step for Uganda as it gives a roadmap for the commercialization of petroleum resources discovered in the country”.

She said the oil companies were expected to support the government in developing a 60,000-barrel refinery while the State would in turn back the firms’ exploration on building an oil pipeline to export crude oil.

“My ministry is taking forward the development of the refinery and is now acquiring 29 square kilometres of land in Hoima for the project,” said Ms Muloni.

Six firms have been shortlisted to submit proposals for the refinery development although only one would be picked, revealed the minister. The refinery is expected to be complete by 2017.

The government has insisted on having a refinery built in the country so that it can reduce the costs of importing oil-related products—estimated at 15 per cent of the $400 million to be spent per year.

Whereas all parties were tight-lipped on details of the oil pipeline, Daily Monitor has learnt that the 1,325km facility that could cost up to $4 billion will snake from Hoima through South Sudan to the multi-billion Lappset corridor in North East Kenya.

Uganda currently has recoverable oil reserves estimated at 1.2 billion to 1.7 billion barrels from the 3.5 billion discovered so far.