Form joint ventures to acquire requisite standards, says PAU

The oil and gas sector is highly regulated. Therefore, it requires companies with a solid foundation. file PHOTO 

What you need to know:

Because of the high level of regulation, it is important that firms that seek to participate in the oil and gas sector fulfil requisite standards. 

Ugandan firms must build capacity through forming joint ventures where necessary to deliver requisite standards in the oil and gas sector, according to the Petroleum Authority of Uganda (PAU). 

Speaking in a telephone interview, Ms Gloria Sebikali, the PAU public relations officer, said given that the next three years ahead of first oil in 2025 are going to have a lot of activities, Ugandans must not be left behind, noting that where necessary, they should form joint ventures to gain experience and build capacity from existing companies that are specialised oil and gas fields.

“Joint ventures are one of the ways in which Ugandan companies can acquire capacity in some technical areas and also benefit from technology transfer from companies that have experience in specialised oil and gas fields,” she said, noting that a number of small and medium enterprises have not built enough capacity especially in areas that are deemed specialised. However, Ms Sebikali said joint ventures can only be allowed before a contract is awarded.

Following the signing of FID by joint venture oil companies and governments of Uganda and Tanzania, government is expected to intensify infrastructure developments, which requires a stable supply of a number of material and equipment.

According to PAU, the technical schedule for the projects indicates that first oil will be achieved between 36 and 45 months after taking the Final Investment Decision.

Mr Ernest Rubondo, the PAU executive director, said FID will be characterised by intensive activity and is expected to unlock a detailed plan of the engineering, procurement and construction phase, where the bulk of opportunities lie.

“This is critical for Ugandans and Ugandan firms that have and continue to develop the required capacity to harness these opportunities,” he said, noting that initial opportunities will relate to pre-drilling and related civil works including site preparation, construction, and related supplies.

Mr Rubondo also highlighted that they anticipate a sharp demand in construction materials such as marram, sand, aggregates, and cement could go as far as more than three million tonnes.

“With this momentum, 2022 is going to see a beehive of activity for the oil and gas sector, the Ugandan economy, and the region at large. The contracting and land acquisition processes will be concluded, and work on the ground will intensify, with the commencement of development drilling of the planned 450 wells in the second half of 2022,” he said.

Joint ventures in Hoima

In Hoima, a number of companies have already prospected to benefit from the construction industry and are moving to form joint ventures to strengthen their capacities.

Mr Stephen Mugenyi, the director of Kihukya Investimates, which deals in sand mining in Bunyoro sub-region, said that local companies are now forming joint ventures in order to raise capital to acquire both machinery, human resources and fund.

“We formed a group called Bunyoro Business Club and we are trying to [to tell Ugandans some] of our challenges to see if we can be helped. We need a lot of support in order to benefit,” he said.

Mr Fred Musinguzi, the managing director of Muka Investments, which deals in civil engineering solutions in Hoima City, said joint ventures were the way to go.

“Most of us are small and medium enterprises. We lack capacity in certain areas,” he said, urging government to support them, especially in areas that are highly specialized.

Early this month, the Petroleum Authority of Uganda partnered with Stanbic Business Incubator and others to build the capacity of more than 200 Ugandan enterprises along the EACOP.


You're all set to enjoy unlimited Prime content.