What you need to know:
- After almost a decade of unmet timelines and fruitless commitments the oil companies, French TotalEnergies EP & and China’s Cnooc early this year declared the long-awaited Final Investment Decision (FID) for Uganda’s oil project, kick-starting the development phase for the required infrastructure required to start oil production
After almost a decade of unmet timelines and fruitless commitments the oil companies, French TotalEnergies EP & and China’s Cnooc early this year declared the long-awaited Final Investment Decision (FID) for Uganda’s oil project, kick-starting the development phase for the required infrastructure required to start oil production. TotalEnergies EP general manager Phillipe Grouiex told Daily Monitor’s Frederic Musisi that the proposed commercial oil production start date of late 2025 is achievable if the current momentum is maintained and other factors are kept constant.
February 1 was a momentous day for TotalEnergies, I imagine like it was for other actors!
It definitely was! The Final Investment Decision (FID) signalled the end of the preparation phase, and the start of a new phase, which is the execution phase. Although the decision took close to 10 years to arrive at it, this period should not be considered time wasted. It enabled us to establish a good foundation for the successful execution of the project.
We now need to build this big project with its three components; Kingfisher, Tilenga, and EACOP, which all together comprise the Lake Albert Development project, of course not forgetting the refinery, which will come in at a later stage. We need to make sure that all these pieces are progressing at the same time to be able to achieve the much-targeted first oil produced and exported in 2025.
Having prepared for this phase for a while, I can say with certainty that we are ready to successfully execute the project. As you may be aware, even before the FID announcement, we had made tremendous progress on some of the key project activities such as the land acquisition, compensation, and resettlement. We had also issued conditional letters of award to the main contractors to commence on some critical path activities for the project.
With the achievement of FID, we have since awarded the major contracts for Tilenga, EACOP, and Kingfisher projects and mobilised all main contractors. To focus more on Tilenga project, before you can mobilise the 10,000 people to build the Central Processing Facility (CPF), the first step is to provide the accommodation. This is like building a small city of around 4,000-6,000 people, and is currently ongoing at the Tilenga Industrial Area in Kasenyi Village, Buliisa.
The drilling rigs are currently under construction in Beijing, China; our target is to start drilling using at least one rig before end of 2022. The second rig will arrive early next year. So here we are! It is an exciting journey, and we are more than ready, logistically as well to deliver this product.
So it’s safe to say all Tilenga EPC-related tenders have been signed off? How many contractors are they?
Yes, these have been signed off and awarded. Whereas I may not be able to mention them all, I will list some of the main contractors, who include a consortium of McDermott and Sinopec; the contractors for the CPF and the offsite—the site from the CPF to the wellpads. McDermott will focus on the construction of the processing plant and Sinopec on the flow - lines that will connect the oil wells to the CPF. ZPEB will construct the rigs and Vallourec will do the tubbing. Schlumberger is dealing with directional drilling and logging. Of course, you also have all the sub- contractors being mobilised by the main contractors.
You talked of a small village, mobilising from 4,000 to 10,000 contractors, which capacity hasn’t been in place. How’s that process going?
I can say all is going well. Construction of the accommodation facilities in the small village has started, and you can physically see some structures on ground. McDermott has awarded the catering contract and this sub-contractor should be able to start providing the catering services soon.
Obviously, we expect the company to source locally whatever is available to feed the project workers. This is part of our strategy to ensure maximum participation from the local communities surrounding the project so that they can also benefit from the project.
In terms of Tilenga Capex the figures of been quite moving up and down. Which is which?
The overall investment for the Lake Albert Development Project is $10b (Shs36 trillion). For Tilenga alone, you are talking about $4.5b-$4.6b (Shs15 trillion-Shs16 trillion).
In terms of the development plan for Tilenga. Is it sequenced that this is what we expect to see by or during a certain period?
First and foremost, you need all the necessary components to make sure you can start. Let me give an example of the drilling activity, first we must prepare the wellpads. This is mainly civil works, which we started six months ago for the CPF. Next will be the mobilisation of civil works for the wellpads before commencement of the drilling activity when the Rig arrives before end of year. We are going to drill a number of wells per well-pad; about 15 to 20 wells and while the drilling sequence continues, the rig will be moved to another well-pad. Sinopec will come in and start connecting the wells soon after the rig move. All these activities will happen more or less in parallel of each other
Also important to note is the level of expertise and amount of resources we are dedicating towards developing the Tilenga project in a responsible manner. We know this project will lead to an influx in the area, so we must ensure that this does not become detrimental to the conservation programme of the Murchison National Park or to the tourism activities. TotalEnergies is committed to achieving a net positive gain for biodiversity and ecosystem services in and around Murchison Falls in line with International Finance Corporation standards and national legislation. Together with Uganda’s ministries of Energy; Tourism and wildlife, we have been working on some key initiatives such as the net-gain programme for biodiversity. We have an ambitious programme in place to kick off and take action.
Against this backdrop what are your/TotalEnergies’ key hopes and expectations?
It is not just hope; it is more than hope, it is a commitment, and we must deliver on this commitment. To deliver this, our commitment is threefold; First, it is the oil and gas facilities; we need to build I would say the best oil and gas facilities that will be operated safely for the next 25 years, and this we must achieve on time and on budget.
Second, it is our social commitment; we must ensure that all the project affected persons have a more improved livelihood than they did before the project activities started. We are undertaking a number of livelihood restoration initiatives to achieve this.
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Third is conservation and biodiversity; we aim to not only implement but demonstrate the achievement of net positive gain on the project. We will, therefore, have to monitor progress alongside that of the project itself. We should all be happy once we have successfully delivered on these three keys components of the project.
On biodiversity, your company has during the last almost 10 years held pretty solid reviews on working in the Murchison National Park and not kicking up a storm. Now you are moving into a machine intensive phase and game is likely to change?
Let me take this opportunity to talk more about our net-gain programme on biodiversity. From the onset of the project design, all efforts were geared towards minimising as much as possible the footprint of the oil and gas activities inside the park. We have since continued to challenge the size of the well-pads where we have further reduced (them?) by 12 percent in order to avoid / miminise impact of our project activities.
We also aim to minimise the logistical and operations related movements (cars and tracks) during progress of project activities. We will undertake restoration activities and offset any residual impacts to achieve Net gain. This requires a special action plan and we have been working together with National Environment Management Authority and Uganda Wildlife Authority,\ with the aim of further strengthening governance of the park to reduce human pressure on the park.
Then there is climate change. The Uganda project has been in the news for all the reasons, including being de-campaigned by environmentalists who say the safety nets are not adequate.
I can tell you with certainty that climate change and the reduction of carbon emissions have been a going concern since the inception of the Tilenga project. As a result, mitigation measures have been embedded within the project design. Some tangible actions related to this include the use of the best available technology in terms of efficiency of equipment.
Secondly, we have decided to use power from the grid, to burn less gas, and then extract Liquefied Petroleum Gas (LPG). This will create a large supply of LPG in this country for domestic use and probably for export. Working together with the government, we hope to encourage the use of LPG to reduce the use of charcoal, which in turn should lessen the pressure on forests.
During announcement of the FID we signed a renewables MoU with ministry of Energy, which was another key milestone for us in our energy transition journey. Through this MoU, we are working with the ministry of Energy, to develop one gigawatt of renewable energy by 2030; it could be in the form of solar, wind or geothermal, we still in early stages of defining related actions. Of course, we must not forget that the world will still rely on fossils for some years to come - fossil fuels remain a key enabler in the energy transition.
A strong demand for energy in Uganda is foreseen, and we are happy to assist through the development of the L. Albert project to meet this demand. Is this project good for Uganda, you may ask? It is good project for Uganda because it is compatible with the development of renewables. At TotalEnergies, our ambition is to be a world-class player in the energy transition. The Uganda project with its low emission of 13 kilos of carbon dioxide ranks well compared to other projects around the world and is therefore compatible with our global ambition.
Any lingering operational challenges?
Projects of such magnitude are never without operational challenges. The Lake Albert project is a big and technically complex project. However, having a good project Management team and expertise enables us to manage related difficulties and any unforeseen events effectively. Take the Russia-Ukraine crisis, for instance, a few months ago nobody could have imagined that this will happen. There will always be unforeseen events, but the ability to anticipate and mitigate such impacts is really one of the core competencies of TotalEnergies in managing large scale projects. So, whereas we may not know what will happen during the next 4 years until 1st oil, we will remain proactive in monitoring and mitigating any unforeseen events.
In terms of outlook, unforeseen events such as the Russia-Ukraine crisis kept constant, is 2025 for delivery of first oil tenable?
Working jointly with our Joint Venture partners—Unoc and Cnooc—together with all the relevant government entities, we must continue to anticipate and develop actions required to maintain a good alignment for all key project components. We need to monitor the progress of each component – i.e. in the upstream and midstream to ensure uniform progress. We will also continue to monitor our operational environment to be able to anticipate and mitigate impacts borne from unforeseen events as much as possible.
Having said that, personally, I am very optimistic that we will get there and get there in good time.
The February Final Investment Decision means Uganda’s oil project has moved to the next development and construction phases, and subsequently starting commercial oil production by tentatively 2025, according to government’s schedule.
It means the oil companies, TotalEnergies will start construction activities in overdrive on its Tilenga oil project to the north and east of Lake Albert in Nwoya and Buliisa districts. In June last year the company awarded the $2b (Shs7trillion) Engineering, Procurement, and Construction (EPC) tender for Tilenga to a consortium of China’s Sinopec International Petroleum Service Corporation and US-based McDermott International.