While much of Africa's oil production is exported in its crude form,Uganda is primed to build its own oil refinery. This ambition is set to be realized after the China National Offshore Oil Corp. (CNOOC) struck a $2-billion licensing deal to develop a vast petroleum field inUganda. Signed in late September, it was the first oil production license to be issued inUganda.
Peter Lokeris,Uganda's Assistant Energy Minister, said inKampalathat the deal with CNOOC is a milestone that will allow the country to become self-sustaining in oil and gas production.Ugandais looking at both domestic and nearby East African markets for distribution of its oil products, the revenues of which could benefit millions of its most impoverished citizens. As a landlocked country,Uganda currently imports all its oil products, with the majority brought in by costly road transport from Mombassa inKenya.
"We hope that CNOOC will quickly operationalize the 40,000 barrel per day capacity of Kingfisher oil field," Lokeris said.
The Kingfisher oil field is located around Lake Albert in Bunyoro, Hoima District, and was discovered by the Kingfisher-1 exploration well in 2006 by Heritage Oil and Gas Ltd. The Kingfisher Well is jointly owned by Total, Tullow and CNOOC, with CNOOC the main operator.
Further appraisals of the field led to other discoveries of wells, now known as Kingfisher-1A, 1B, 2 and 3. The field is estimated to have combined oil deposits of 635 million barrels, 196 million barrels of which are recoverable.
To gain the license, CNOOC agreed to several stipulations, including producing oil in a sustainable and environmentally friendly manner. Lokeris said an environmental and social impact assessment (ESIA) of the oil field's development is underway.
A statement issued byUganda's Ministry of Energy said the long-term plan is to develop a refinery of 60,000 barrels of oil per day (BOPD) starting with a 30,000-BOPD refinery, which will be in place by 2017/18. This date coincides with the CNOOC's expected oil production start from the Kingfisher field.
Speaking about the new deal in parliament, Prime Minister Amama Mbabazi said the government wants to place the newfound oil wealth at the center of its strategic transformative agenda for the country. "We shall do that by working with trustworthy and dependable people," he said.
Since granting the Kingfisher field license to CNOOC in early October, the government has also invited tenders for the construction of a $2.5-billion refinery, with the selection of the refinery operator expected around April 2014.The Ugandan Government has already procured 29 square km of land in Hoima, Western Uganda, 230 km from the capital Kampala and in proximity of the oil field, to use as a base for the refinery project.
"We are committed to a transparent process to develop Uganda's first oil refinery," Fred Kabagambe-Kaliisa, the permanent secretary in the Ministry of Energy and Mineral Development, told Uganda'sNew Vision.
"This project marks the start of Uganda's energy independence and the refinery will enhance Uganda's energy security by unleashing the opportunity of our country's rich oil resources, which some have described as the largest onshore oil discovery in Africa in the past 20 years," Kabagambe-Kaliisa said.
Regional inclusion in the benefit fromUganda's oil reserves is a focal point.
Robert Kasande, the team leader of the Uganda Oil Refinery project, told Uganda'sNew Timesthat four East African countries had been invited to invest in the refinery's public shares, which make up 40 percent of the company's ownership, set up as a private-public partnership. "We have extended the invitation for the public stake to our regional partner states. They will have 10 percent," he said.
Uganda's oil discovery was first reported seven years ago, but getting the oil out of the ground and into a refinery has been a frustrating exercise in bureaucratic barriers and red tape.
The country's oil reserve is estimated at 3.5 billion barrels by its energy ministry, and the IMF reportsUgandahas Sub-Saharan Africa's biggest oil reserves afterNigeria,Angolaand South Sudan.
(Reporting fromKenya)
