Govt lays oil refinery outlook

Friday April 27 2018

At work. An expert watches a flaring experiment

At work. An expert watches a flaring experiment at one of the wells in the Albertine Graben. The refinery is a key stage in the production of oil in Uganda. FILE PHOTO  



The internal rate of return on the proposed oil refinery is “extremely attractive” given the amount of money, $1.7b (Shs6 trillion), Uganda spends on annual petroleum imports and the prospective regional market, the Uganda Refinery Holding Company (URHC) general manager Michael Mugerwa has said.
UHRC is a subsidiary of the Uganda National Oil Company (UNOC).
Speaking at the annual oil and gas convention in Kampala, Dr Mugerwa said the project will trigger several benefits key among them stabilising Uganda’s balance of payment and creating hundreds of jobs.
“It is really an exciting opportunity whichever way you look at it,” he said.
Uganda’s petroleum products imports as of September last year averaged at 85 million litres with demand growing at 7 per cent per annum, according to ministry of Energy.
The 85 million litres comprised of 34.6 million litres of petrol, 42.5 million litres of diesel, and 2.6 million litres of kerosene. Jet fuel imports stood at five million litres.
According to the ministry, average daily consumption of fuel products stands at 5.4 million litres.
Keeping all other factors constant, government is also capitalising on the petroleum market in Rwanda, Burundi and South Sudan, Kenya, Tanzania and eastern DR Congo.
The earlier plan was to start commercial oil production in 2020 but given the work at hand it is highly likely that the production date will have to be shifted.
The refinery is expected to be financed in a public private partnership arrangement, with the Albertine Graben Refinery Consortium taking a 60 per cent stake and government taking 40 per cent.
Kenya and Tanzania also offered to buy a 2.5 per cent and 8 per cent stakes, respectively in Uganda’s 40 percent stake.
Total E&P also offered to buy a 10 per cent stake, which leaves government with roughly 19 per cent.
The director for technical services at Petroleum Authority of Uganda, the industry regulator, Ms Peninah Aheebwa, said the oil and gas sector is broadening from exploration to new exploration and development of discovered oil and gas fields together with refining and pipeline infrastructure development, which calls for “mechanisms to ensure sustainable exploitation and utilisation of the resources are in place.”
Projections indicate that oil companies have to invest approximately Shs27 trillion ($8b) in the required infrastructure leading to production. This is besides investments in the refinery and the 1,445-kilometre crude oil export pipeline from Hoima to Tanga Port in southern Tanzania.