FID on Uganda Refinery Project set for June

by Business Times
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The Final Investment Decision (FID) for Uganda’s Oil and Gas refinery project is set for June 2023, this is according to the Ministry of Energy and Mineral Development.

Presenting a statement on oil and gas sector performance for last year and outlook for 2023, the Minister for Energy and Mineral Development, Ruth Nankabirwa revealed that the Albertine Graben Energy Consortium (AGEC) submitted the Refinery project Front End Engineering Design (FEED) to the Government in August 2021, and Petroleum Authority of Uganda (PAU) accordingly approved it in July 2022.

“The Ministry is facilitating the negotiation of the three key agreements required to enable the Refinery project. These negotiations cover the Crude Oil Supply Agreement (CSA), the Implementation Agreement (IA), and the Shareholders Agreement (SHA). AGEC contracted a JV between Det Norske Veritas-Germanischer Lloyd (DNV- GL) and a Ugandan company, Atacama Consulting Ltd, to undertake the ESIA for the Refinery project. This is expected to be submitted to NEMA for approval during Q1 of 2023,” she told journalists on Friday.

The Uganda Refinery Holding Company Limited (URHC), a subsidiary of Uganda National Oil Company Limited (UNOC), will hold Uganda’s commercial interests on behalf of the Government of Uganda participating with up to 40% shares, according to initial plans.

The Refinery Project will also include the construction of a 213-kilometre refined products pipeline from Hoima to Namwabula-Mpigi. At least 72percent of the 4,270 project-affected persons have signed for compensation, and payment of compensation stands at about 41per cent.

Uganda is now one of the most established petroleum provinces in the world, with an estimated volume of 6.5 billion barrels, with 1.4 billion barrels are recoverable, of which 1.04 billion barrels are classified as reserves.

Status of Oil and Gas activities in Uganda(Source:PAU)

Petroleum Licensing

According to Nankabirwa, through her ministry, government is preparing to execute Production Sharing Agreements with UNOC and DGR-Global – the two successful companies from the Second Licensing Round that commenced in May 2019.

Exploration licenses will soon be issued to UNOC and DGR Global. Six oil companies applied for prequalification for the five blocks on offer, and four were shortlisted.

“The Ministry also plans to announce a Third Licensing Round during the East African Petroleum Conference and Exhibition, scheduled to take place in May 2023 in Kampala,” she revealed.

ALSO READ: The status of Uganda’s Oil and Gas sector

Participation of Ugandans

In terms of employment, the minister noted that by November 2022, 6,233 people were employed within the sector, of which 5,875, representing 94 per cent, were Ugandans.

“The Licensees directly employed 506 people, 70 per cent of whom are Ugandans, while their contractors and subcontractors employed 5,647 people, 97 per cent of whom are Ugandans. Compared to the estimated number of jobs, this is slightly less than half of what is expected,” said Nankabirwa.

She further revealed that by the end of 2022, the National Oil and Gas Talent Register (NOGTR), PAU established in February 2019, had 7,695 registered talents and 117 employers.

“In 2022 alone, 1,750 registered on the NOGTR, representing 23 per cent of the total number of talents registered since the platform was launched. A total of 373 jobs were posted on the system by different employers,” she said.

Regarding the utilization of Ugandan goods and services, the minister noted that the cumulative value of the 206 Tier-1 contracts reviewed after the launch of the projects in April 2021 stood at close to US$ 6.9 billion at the end of 2022.

Ugandan companies made US$1.7 billion (or 25 per cent) through direct Tier-1 contracting (US$ 958.4 million) and Tier-2 subcontractors from international companies (US$746.1 million). Close to 700 Tier-2 contractors are actively participating in the ongoing activities.

According to Nankabirwa, the foreign companies awarded contracts at Tier-1 and Tier-2 levels are expected to sub-contract more to Ugandan companies at the lower contracting levels. This is expected to increase the participation of Ugandan entities in the sector towards the targeted 40 per cent participation.

She added that as a result of the skilling efforts undertaken, a total of 11,021 Ugandans have been trained for the last six years, 2017-2022, in both the vocational and technical aspects of the sector, with 940 Ugandans attaining international industry certifications. Additionally, 200 MSMEs were trained in Business Development in 2022.

“In 2022, Ugandan companies could provide goods and services worth over US$ 524 million (17.5 per cent) out of the total investment into the sector of US$ 2.995 billion at the end of September 2022. US$ 866,853 was contracted from the host Districts of Hoima, Buliisa, Masindi and Pakwach. The projected investment for 2023 is estimated at US$1.8 billion Dollars. The total number of Ugandan companies that participated in providing goods and services is 187,” she noted.

Climate Change

One of the key milestones for 2022 according to Nankabirwa was the launch of the National Oil Spill Contingency Plan (NOSCP) in March 2022 by the Rt. Hon. Prime Minister, Robinah Nabbanja.

The NOSCP is a national framework and command structure for planning, preparation, and response to oil spills. The NOSCP and the related regulations require local governments and lead agencies to develop oil spill contingency plans.

Climate change is one of the core factors influencing and driving the global future of the oil and gas industry, with implications for Uganda’s planned Oil and Gas developments.

“The Government has taken cognizance of the climate change developments at both global and national levels to track the developments and ensure that Uganda’s projects continue to be achieved with minimal carbon intensity. It should be noted that the climate change aspects of the Tilenga, Kingfisher and EACOP projects were already assessed within the Environment, Social and Impact Assessment studies approved by the National Environment Management Authority,” she added.

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