Participation in huge projects in nascent oil and gas sector is welcome, Uganda says

Uganda is calling on Chinese companies to increase their investment in its nascent oil and gas sector to help the country realize its energy production goals.

According to Ernest Rubondo, executive director of the Uganda Petroleum Authority, the country plans to develop oil fields, build a crude oil export pipeline and construct a refinery, beginning next year. To finance the projects, the country will need nearly $20 billion over the next three to five years.

The money will be used to develop 10 oil fields ($8 billion to $9 billion), construct the refinery ($4 billion) and build the 1,443-kilometer pipeline ($3.55 billion).

The remaining $3.45 billion will be used for supporting infrastructure and other requirements.

Opportunities also lie in the country's Albertine Graben region, since so far less than 10 percent of the project has been licensed. The first competitive licensing round for 2,900 square kilometers was announced in February 2015, and plans for the second round of licensing are underway.

The exploration is expected to last four years at an estimated cost of about $100 million.

Uganda also plans to drill about 500 wells in the next three to five years. This is in addition to the construction and maintenance of two central processing facilities.

"We plan to construct about 250 kilometers of in-field flow lines, crude storage tanks/facilities, as well as waste management, treatment and logistical services," Rubondo says.

There is also a plan to construct power generation plants using gas and crude oil.

Rubondo says that intense oil field development is due to begin in 2018 and will last three to five years. The projects are estimated to cost $11.3 billion.

On refinery development, the country plans to construct a 60,000-barrels-per-day green field refinery.

The feasibility and commercial viability of the refinery have been studied and confirmed by Foster Wheeler, Taylor-Dejongh and Jacobs Consultancy. The land has also been secured.

Rubondo says efforts are ongoing to find a lead investor to design, finance, build and operate the refinery on a private basis, with possible equity participation from the government.

The project includes a 211-km pipeline from the refinery site to a terminal near Kampala. The project is estimated to cost between $3 billion and $4 billion.

Uganda plans to construct 1,445 km of crude oil pipeline from Hoima to the port of Tanga in Tanzania. An estimated $3.554 billion will be spent over the next three years.

There are also plans to construct a 102-km northern feeder pipeline and a 47-km southern feeder pipeline, with capital expenditure estimated at $358 million. Additionally, a 211-km petroleum product pipeline will be built at an estimated cost of $209 million.

Opportunities also lie in construction and operation of the pipelines, together with attendant supplies and services like steel pipes, crude pumps, heaters, flow meters, excavation, civil works and logistics, freight and forwarding, transportation, catering, power supply and security.

Other opportunities include the construction of an industrial park that will include a refinery, facilities for a crude oil export hub and petrochemical industries.

"The government of Uganda welcomes the Chinese private sector to support the industry through, among others, direct provision of specialized services (and) development of local content by supporting indigenous Ugandan entrepreneurs through joint ventures or support skills development," Rubondo says.

Uganda has confirmed that it has oil reserves amounting to 6.5 billion barrels. Its recoverable crude oil reserves are estimated to be 1.4 billion to 1.7 billion barrels. Uganda has sub-Saharan Africa's fourth-largest crude reserves, after Nigeria, Angola and South Sudan.

Total trade volume between China and Uganda has grown by 10.7 percent between 2011 and 2016.

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