Ugandans dominate oil jobs, but not the big-ticket contracts
The oil rig during the assembling process at Kingfisher oil field in November 2022. The sustained push to start oil production by 2025 has seen more investment in oil-related infrastructure. PHOTO/COURTESY OF CNOOC.
What you need to know:
- Of the 15,451 people directly employed by the licensed oil companies, their contractors and subcontractors, 13,038 are Ugandans.
Ugandans hold a majority of jobs in the oil and gas sector in the country, with figures showing nine in every 10 workers are locals.
Yet they lag behind their foreign counterparts when it comes to securing the big-ticket contracts, which are often awarded to European and Chinese multinationals.
Energy Minister Ruth Nankabirwa said that out of 15,451 individuals directly employed by the licensed oil companies, their contractors and subcontractors, 13,038 are Ugandans.
That accounts for 90 percent of the jobs, but only scratches the surface as a peak workforce of about 160,000 is anticipated in the operational phase ahead.
So far, contracts valued at $5.3 billion have been awarded for the upstream Tilenga and Kingfisher projects as well as the midstream development of the East African Crude Oil Pipeline (Eacop), out of the $7.2 billion worth of tenders approved by the sector regulator, the Petroleum Authority of Uganda (PAU).
Out of these, Ugandan firms have taken contracts worth $2.1 billion – representing 40 percent of the total – which is about the local content target for the industry, as government executives push for more benefits from these projects to be retained in the country.
The details emerged during this year’s National Content Conference, which sought to assess the benefits to Ugandans and local contractors, three years since oil majors TotalEnergies and China National Offshore Oil Corporation, announced the final investment decision of $10 billion in Uganda’s oil projects.
Thr final investment decision cash was billed as the windfall for local companies and individual oil and gas experts to win contracts and get jobs in the upstream Tilenga and Kingfisher oilfields development and construction of the 1443km Eacop from Hoima in western Uganda to the Tanzanian port of Tanga.
PAU executive director Ernest Rubondo says opportunities for local content are a result of Uganda’s extensive preparations for national participation in the oil and gas development phase.
“These efforts included conducting studies, setting up training centres, obtaining international accreditations, and establishing business incubators. While preparations for the operational phase are ongoing, initiatives like the Tilenga and Eacop Academies are equipping the required workforce for future demands,” he explained.
In September this year, Eacop Ltd, the company that manages the pipeline’s construction and operations, inaugurated the Eacop Academy at Mt Meru Hotel in Arusha, Tanzania, through its Massive Open Online Course to train talent that will feed the multibillion-dollar projects with a skilled workforce.
The company signed memoranda of understanding with the Arusha Technical College and Vocational Education and Training Authority, as well as the Uganda Petroleum Institute Kigumba to conduct the trainings for specific skills tailored for the oil and gas sector.
Foreign companies have hogged the big tenders, including logistics, line pipe manufacture and supply, pipeline construction, drilling, feeder pipeline and injector pump installation.
But experts caution local firms not to vie for jobs they may lack the financial muscle and adequate technical expertise to handle.
Egbert Faibille, CEO of Ghana’s Petroleum Commission, said the winning formula – in the upstream and midstream operations that are intense on technical aspects – lies in the unbundling of large contracts to enhance the involvement of local entities through subcontracting.
“While large contracts averaging $50 million to $100 million dominate the upstream petroleum industry, breaking down scopes can create efficiency and value. Small firms, with their lower overhead costs and ability to respond swiftly, are essential to modern supply chain management,” he said.
Peninah Aheebwa, director for economics and national Content at PAU, also hailed Uganda’s strides in promoting local participation in the oil and gas sector developments, noting investing in capacity building and joint ventures are also key to unlocking some of these contracts.
For instance, 35 joint ventures have secured contracts worth $300 million, out of 64 approved, and over $200,000 in software licences have been distributed to universities to foster technology transfer and capacity building.
Under the oil and gas industry, contracts are classified as tier one, tier two and tier three; tier one jobs are multibillion-dollar contracts such as construction of $5 billion Eacop, awarded to China Petroleum Pipeline Engineering, or the $2 billion contract for Tilenga, awarded to McDermott.
After winning the multibillion-dollar tender, tier 1 contractors CPP or McDermott may then subcontract tier 2 companies, who may also further subcontract to the project or aspects of the project to tier three companies or in joint-venture bids.
