Photo: Tullow Oil

Uganda – Moving Towards Commercial Oil Production

The discovery of large oil reserves in Uganda in 2006 led to widespread expectations that the economy would quickly be transformed. The dream is now set to become a reality.

Huge reserves

Uganda’s current oil reserve stand at 6,5 billion barrels with 1,7 billion barrels recoverable from the ground. It is possible that more discoveries will be made in the future.

Production licenses have been issued for three blocks, a deal has been struck for the route of the pipeline to take the oil to the sea, from the Hoima district to the Tanzanian port of Tanga, and the final preparatory studies have begun. The Albertine Graben Refinery Consortium, which includes USA’s General Electric and Italy’s Saipem SpA has been selected to build and operate a 60.000-barrel-a–day refinery.  Infrastructure construction has started and the government has set up the Petroleum Authority (PAU) to regulate the industry. Exploration licenses have also been issued for new areas.

Starting next year

The big spending is expected to begin next year. Irene Muloni, the energy minister, puts the cost of building the upstream facilities and pipeline at up to $10bn, while the refinery that Uganda wants could be another $4bn. The government will continue working with the private sector and other stakeholders to fast track the development of critical infrastructure including pipelines, central processing facilities, the refinery, storage hubs, an international airport and roads among others to enable the country to handle the first oil.

The French oil company that is developing the threes fields, along with Tullow and China’s CNOOC, expects to start producing oil by 2020. At full production, the fields are expected to produce up to 230.000 barrels a day at an estimated production cost of $25 a barrel.

Opportunities

As the sector readies for the development and production phase many business opportunities are present. Industry is at its forefront and needs to build the entire value chain.  Many Ugandan companies are looking for strategic partnerships with Norwegian companies/expertise.

For more information please contact; Innovation Norway East Africa Director Rita Brokstad, rita.brokstad@innovationnorway.no

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