Shs10 trillion to be invested in oil and gas in 2025 says PAU
An oil rig in a well pad in Kingfisher Development area in Kikuube District. As Uganda prepares to become an oil producing nation, investments continue to reshape key developments in the Bunyoro Sub-region. PHOTO/ALEX ASHABA
What you need to know:
- The insurance sector players believe a single participant is vulnerable to losses and would crimple the insurance industry and that is why they are joining forces (consortium).
Petroleum Authority of Uganda (PAU) says at least $2.81b (Shs10.291 trillion) will be invested in oil and gas by licensed companies in 2025.
Speaking at the Insurance Consortium for Oil and Gas Symposium 2025, Mr Ernest Rubondo, the PAU executive director, said by the end of 2024, $9.96b (Shs36.4 trillion) had been invested in oil and gas, with $1.96b (Shs7 trillion) and $2.44b (Shs8.936 trillion) invested in 2023 and 2024, respectively.
“When it comes to national content, the sector will create value in the Ugandan economy, achieve in-country value creation and retention, ensure competitiveness, and develop national human capital in oil and gas and related disciplines, as well as enhance competitiveness enterprises supplying oil and gas alongside other sectors,” he said.
The investment, he said, will result in more than 15,169 jobs, with 89 percent being Ugandans.
The oil and gas sector has more than $5.3b (Shs19.4 trillion) worth of contracts, of which $2.1b has been awarded to Ugandan companies, with more than 630 companies out of the 3,087 registered on the national supplier database awarded contracts, of which 465 are Ugandan companies. The investment will result in heightened activity for other sectors of the economy, such as insurance, that are key in the operations of the oil and gas sector.
Currently, there are 36 insurance companies registered on the national suppliers’ database, which qualifies them to participate in the oil and gas sector service provision.
Opportunities for insurers in the oil and gas sector include insurance and reinsurance brokerage services and insurance policies, construction all risks, third-party liability and operator extra expenses, insurance for equipment including fleet or cars and office equipment, and premises.
The others are provident fund administration, medical insurance for staff across projects, group personal, accident, and group life insurance.
Mr Rubondo said the insurance sector has a lot of opportunities in both upstream and midstream coverage, which include pipeline, marine cargo, and storage tank insurance.
Other opportunities include under storage tank insurance, which cover damages to storage facilities and environmental liability insurance.
However, there are also other specialised emerging insurance opportunities such as cyber insurance, carbon credit and ESG insurance.
Mr Richard Scott, the head of renewables at Oneglobal Broking, said major oil and gas companies that have a global insurance programme and have a strong balance sheet could invest in projects that can help them to improve their bottom line.
“For the renewable space, it is independently financed, and therefore without the insurance, it is very difficult to get the financing,” he said.
The insurance sector players believe a single participant is vulnerable to losses and would crimple the insurance industry and that is why they are joining forces (consortium).
