President Museveni yesterday said the development and production cycles of the oil sector the country is leaping to presented “huge opportunities” for both citizens and the private sector considering the volume of goods and services required.
The President in his address delivered by Prime Minister Ruhakana Rugunda at the fourth international oil and gas conference under the theme Regional Collaboration for first Oil, which closed yesterday, cited, among other opportunities, last year’s commissioning of the crude oil export pipeline from Hoima to Tanga which is expected to cost Shs12 trillion ($3.5b) and the signing of the oil refinery project framework agreement early this month with a consortium of American and Italian firms.
“This is in addition to the various projects under implementation to support the development of the country’s oil and gas resources,” he said. These projects estimated to cost Shs73.5 trillion ($20b), he added, “have great implications for local content and the national economy at large.”
He also mentioned the awarding of eight production licences for the oil fields in Buliisa and Nwoya to upstream international companies, France’s Total E&P and Anglo-Irish Tullow Oil PLC, in August 2016 in addition to the earlier production licence issued to China’s Cnooc in September 2013.
The oil companies claim they have since 2012 spent a combined $3.3b (Shs12 trillion), mainly on acquisition of seismic data and exploration activities.
The capital expenditure for developing the oil fields is approximated at $6.7b (Shs24trillion) borne by the oil companies, although government has a 15 per cent stake in each of the licences through the Uganda National Oil Company.
In October it will be exactly 12 years since the government confirmed that Uganda’s oil finds were commercially viable from 300 million barrels at the time to currently 6.5 billion barrels.
However, there are big question marks on whether commercial production will start after it has now become apparent that government’s target of 2020 is unrealistic compared to the amount of work.
According to ministry of Energy/World Bank estimates, commercial production will fetch Uganda at least Shs5 trillion ($1.5b) annually.
The conference drew several international players, from contractors, consultants, insurers to big banks such as UK’s Standard Chartered which committed to partner with players on the ground during the respective Final Investment Decisions phases.
Already, the UK government’s export credit agency, UK Export Finance, and Standard Chartered Bank, offered up to $350m (Shs1.3 trilion) to finance construction of the Kabaale International Airport in Hoima.
Cnooc is currently finalising the technical Front End Engineering Designs on its Kingfisher field, after the contractor—China’s Offshore Oil Engineering Co-identified 808 risks and further made 365 suggestions to manage those risk.