Oil: Logistics sector watching with interest

Following the signing of the Final Investment Decision (FID) worth more than $10b last week, one area that is considered important is the logistics sector.

And for that case, a number of people will be watching with interest as the road to oil production takes shape now that FID is signed. 

People like Ms Jennifer Mwijukye, the former chairperson of Uganda Freight Forwarders Association (UFFA) are anxiously waiting.

“We submitted bids and went through pre-qualification. In fact some of us were pre-qualified and we tendered to Mcdermott and currently, we are waiting for formal approval,” she says.

The consortium of Mcdermott and Sinopec have been contracted to do engineering, procurement, construction and management of the Tilenga site under TotalEnergies.

 UFFA is an umbrella association of logistics companies in Uganda with membership drawn from both foreign and local companies that are involved in freight logistics, including customs clearance, transport, shipping, ICD and warehouse operations. Already a number of companies are involved in works that fall under engineering, procurement and construction.

Therefore, this will create a lot of opportunities for logistical companies given that the signing of FID has already enhanced oil related activities. 

 Mr Marting Tiffen, the East African Crude Oil Pipeline (EACOP) Company managing director, says that they have contractors that have been doing engineering, procurement and construction management is concerned.

 “We have been working on this conditional award of contracts [through] four contractors. They have been doing engineering, procurement and construction management,” he says.

 The EACOP Company, he says, is doing a lot of engineering and now that FID has been signed, it will move into procurement and ultimately construction and management.

Already government has signed agreements for host countries for the EACOP, passed the East African Crude Oil Pipeline Bill, which all indicate the massive need for a grounded logistical sector.

While signing the FID last week, Mr Chen Zhuobiao, the president of CNOOC said the Kingfisher Project shall produce 40,000 barrels of oil per day during peak production and a Central Processing Facility shall be constructed at Buhuka Flats.

 Other activities that are expected to keep the logistical sector busy include 31 wells on four wellpads, access roads, water intake point, safety check station, 46 kilometre feeder pipeline, camps and laydown areas among others.

It is estimated five million tonnes of equipment will be need during the oil development stages. This will provide massive work for the logistics sector.  

Logistical needs       

One of the most important question is what kind of logistical needs are going to be required for the development stage, which stage involves awarding of contracts.

 Mr Denis Kakembo, a tax specialist and energy lawyer with Cristal Advocates says the development stage will involve building the central processing facility that will remove impurities such as water stones and soil, among others from the crude oil.

“The crude oil will be also be collected from several wells apart from each other that will be drilled. This means that several field pipes will be built within the oil field to transport the oil into the central ptocessing facility,” Kakembo explains.

Once the oil has been purified through the central processing facility majority shall be conveyed to the East African Crude Oil Pipeline for transportation to the Tanga Port and some to the refinery in the event this refinery project takes off.

 He adds that the camps to provide accomodation to the workers who are going to build the requisite oil production infrastructure will also be built.  This necessitates that the drill rigs that will scoop the oil out of the ground will need to be imported. In addition, lots of machinery including pipes and other specialised oil and gas material will be imported, which will provide a lot of work for the logistical sector.