‘Uganda must add value to oil’

Energy is a key driver of economic growth world over. Therefore, overcoming energy poverty is a huge global challenge. 

Closer to home, all countries in East Africa do not produce sufficient energy to meet their current needs. However, petroleum products consumption in the region is steadily growing, despite climate change activism.

The discovery and confirmation of commercial oil and gas reserves in Uganda in 2006 presented an opportunity to positively impact energy poverty.  Government hopes to use oil and gas resources to contribute towards lasting value addition to society.

Commercialisation

Uganda’s commercialisation of oil provides for in-country refining, and crude export. Front end engineering and design studies for both projects have been undertaken and approved by government.  The studies provide for the development of a 60,000 barrels per day refinery in Hoima, and a 219,000 barrels per day crude export pipeline from Kabaale to Tanga in Tanzania. Both projects are economically feasible and offer various benefits. The development of the refinery and pipeline are being undertaken concurrently, and when operational, the refinery will have a right of first call on the produced crude oil. 

Having both projects will ensure continuity in production, especially during periods when either project may be shut down for maintenance.   

The pipeline will provide an outlet for produced oil to international markets to ensure return on investment for both the licensees and government and will provide an alternative import route for goods destined to Uganda and other parts of the region. 

Progress of refinery development

Sustainable utilisation of discovered resources, through value addition is key in addressing present and future energy challenges in Uganda and the region. 

A refinery will not only provide an outlet for the discovered crude resources and enhance energy security, but also create employment for Ugandans.

Since the discovery of oil, government has made great strides towards development of a refinery in Uganda, through a careful process that takes care of social, environmental, and safety concerns. 

Government commissioned Foster Wheeler Energy to undertake a feasibility study for the development of a refinery. The study, which was finalised in 2011, determined that a 60,000 barrels per day refinery was a viable project.

In 2018, government signed a Project Framework Agreement with Albertine Graben Energy Consortium to design, finance, construct and operate a 60,000 barrels per day refinery at Kabaale in Hoima District.

Consequently, the developer embarked on the Front-End Engineering Design for the project, which was completed and submitted to government for consideration. Government has reviewed it and the refinery will be safe and environmentally compliant. 

As required by law, the developer has also carried out an Environmental and Social Impact Assessment, which is being used to validate the design by ensuring that the necessary measures to protect the people and the environment have been adequately considered during the design process. 

The Environmental and Social Impact Assessment will be submitted to the National Environment Management Authority for approval later this year.

The Final Investment Decision (FID) for the refinery is expected in 2023, after which the project will proceed to the detailed engineering, procurement and construction. 

The project has been designed as a robust, technically feasible and economically viable refinery, with deep conversion capabilities that can convert medium-heavy crude into quality products. 

The design has adopted some advanced technologies that have been developed over the years to refine heavy crude oil and upgrade residue oil, using carbon rejection, hydrogen addition or a combination of both, to process crude into finished products by breaking heavy molecules into their light components, and selectively re-configuring them into new high-quality products. Such products will include Liquified Petroleum Gas, diesel, gasoline, jet fuel, kerosene, heavy fuel oil, which will not only meet international products specifications but also fall within the permitted emission limits. 

Risk analysis has been carried out for all the phases of the project including construction and operation to identify any risks to people, property or the environment and necessary mitigation measures have been undertaken.  Energy efficiency improvement measures such as heat integration techniques have been considered during process optimisation and will ensure efficient utilisation of energy. 

Boosting refining capacity 
The development of an oil refinery will boost East Africa’s refining capacity and ensure security of of petroleum supply, especially for the inland markets. 

Besides being a strategic investment for the country, an in-country refinery will improve Uganda’s balance of payment by reducing petroleum product imports and greenhouse emissions footprint.

The refinery will, in addition, generate Liquefied Petroleum Gas that will help offset the use of biomass for domestic cooking and some industrial operations, thus protecting the environment.

It will also produce feedstock for possible future development of the fertiliser industry as offshoots of the petroleum industry, thus enhancing and promoting agriculture.

This article was co-authored by Dozith Abeinomugisha, the Petroleum Authority of Uganda director midstream and Benjamin Ariho, the senior petroleum officer, refining