Uganda Softens on Oil Needs

From BUSINESS WEEK

KAMPALA, Uganda – The Ministry of Energy is loosening its grip on the commercialization of its oil sector. Emphasis is being put on not only the setting up of an oil refinery to alternatives like the use of a crude oil export pipeline of 1200km to Mombasa.

The crude oil export pipeline is highly being promoted by the joint venture partners in oil production, CNOOC Uganda Ltd, Total E&P Uganda B.V. and Tullow Uganda Operations Pty Ltd.

The Government, on 5th February 2014, signed a memorandum of understanding with oil companies, in which it was agreed that commercialization of Uganda’s oil would be through a crude export pipeline, an oil refinery and a petroleum to power project.

“The refinery project is highly still on. We’re seeking for financing partners. But the oil companies are also agitating for an export pipeline, which we thought of as a plan B in our memorandum of understanding,” said Bernard Ongodia, a Senior Geophysicist at Uganda’s Energy Ministry who had represented the Commissioner Petroleum Production.

He said during a presentation of findings from the Industrial Baseline Survey of Uganda’s oil sector.

According to the oil companies, who are strongly planning for an export pipeline, on completion of the project, the total investment will be $12billion to $15 billion.

They say approximately $8 billion will go for the upstream developments and $4billion to $7 billion will be the total cost for the construction of a crude export pipeline. This is in comparison to the national GDP.

“It will also boost one of the longest heated pipelines in the world at an estimated 1,200 kilometers,” said a statement the three companies jointly released.

Ongodia said the government will also incorporate the third option of petroleum to power project.

The Industrial baseline Survey the three oil companies carried out to prepare Uganda for an increase in demand for local goods & services, materials, skilled and less skilled manpower at the development stage show the country is still highly lacking in some key areas.

Vincent Nicolini the Contracts and Purchasing Manager at Total E@P Uganda said Drivers and Civil Craftsmen in Uganda still lack qualitative and quantitative internationally required standards to work in the oil and gas industry.

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