Uganda’s oil prospects are getting brighter as new discoveries are taking place, increasing prospective oil reserves to 3.5 billion barrels. The rational use of these resources for the sustainable development of Uganda, especially in the area of infrastructure, will determine the future of the country. Can you tell us about the Uganda’s oil boom?
The total investments in Uganda’s oil and gas sector over the next two to five years and are expected to be in excess of $10 billion. This investment will be in areas such as field development, refinery development and putting in place supporting infrastructure like pipelines. The petroleum resources in these fields were estimated at over 3.5 billion barrels of oil equivalent in place at the end of 2013. Out of these resources 1.2 billion barrels are estimated to be recoverable. Four of the 21 discoveries made have been considered sub-commercial by industry and relinquished to Government while the other 17 discoveries are being taken forward for development.
What about the commercialization of these petroleum resources?
The government and the oil companies licensed in the country concluded a memorandum of understanding (MoU) during February 2014. The MOU provides for the commercialisation of the discovered oil and gas resources in the country through, i) use of petroleum for power generation; ii) development of a 60kbd refinery in two phases starting with 30kbd; and iii) export of crude oil through an export pipeline or any other viable options to be developed by the oil companies.
The Petroleum Authority of Uganda is going to be created to regulate the sector and the national oil company, to undertake the state’s business. In addition, the Ministry of Energy and Mineral Development is being restructured to create a Directorate of Petroleum to provide policy guidance and licensing in the Upstream, Midstream and Downstream segments of the petroleum value chain.
The oil industry is going to stimulate the participation and employability of the Ugandans. How are you engaging the population into this discovery?
A study to establish the challenges and opportunities for the participation of Ugandans in the petroleum sector was undertaken by the government during 2011. The study recommended among other things, the formulation of a policy and plan for the participation of Ugandans in the sector. As this framework is being developed, oil companies licensed in the country, that is Total, Tullow and CNOOC together with the international companies which offer oil and gas services in Uganda like Baker Hughes, Schlumberger, Nabors and Halliburton have and continue to support skills development and provide employment to Ugandans in the sector. The sector has directly employed over 1,000 people to date, and another 9,000 people are employed through indirect and induced services.
The oil and gas industry in Uganda is expected to generate over 20,000 jobs directly together with the additional 100,000 jobs generated as a result of the multiplier effect in other sectors of the economy during the peak of the planned oil and gas infrastructure developments. Efforts are being made to train Ugandans so that they can be able to take up most of these jobs.
Don’t you think that to getting access to those jobs the work force needs to be trained properly?
The Uganda Petroleum Institute in Kigumba (UPIK) was established in March 2010 to train Ugandans in artisanal and technical skills at certificate and diploma levels. Makerere University in Kampala commenced a Bachelor’s and Master’s Degree Programmes in Petroleum Geoscience in 2009 and 2012 respectively. These programmes are beginning to support the availability of manpower at the skilled and professional levels of the oil and gas sector respectively. Although these institutions are still working to acquire all the tools required for the practical aspects of the training, they are already a source of manpower for the oil industry in the country.
There was and there is lot of debate regarding the national refinery.
The government is taking forward development of a 60,000-barrels-per-day greenfield refinery in Uganda to add value to the country’s petroleum resources and to enhance the security of supply of petroleum products for Uganda in particular and the East and Central African region in general. The land where the refinery and its attendant industries will be developed is currently being acquired. This land, which is 29km², is located in Kabaale Parish, Buseruka Sub County, Hoima District and is being acquired through the implementation of a Resettlement Action Plan. The implementation of this plan is ongoing and involves compensation and resettlement of about 1200 families who are in the area. Fifty percent of these families have been compensated and compensation together with resettlement of the remaining families is ongoing. We are working with a consultant Taylor-Dejongh from USA to procure a lead investor to partner with the government in a public private partnership to develop the refinery.
There is also a need of convergence. Without the inclusion of the region in infrastructural development projects the oil discoveries will remain expensive.
An achievement, which is for the entire East and Central African Region, is the extent to which the oil and gas discoveries in Uganda have opened up the East African Rift System (EARS) for petroleum exploration and development. The EARS which was not considered by the international oil industry as very prospective extends all the way from Malawi to the Red Sea. Following the oil and gas discoveries in Uganda’s Albertine Graben, countries like Malawi, Tanzania, Burundi, Democratic Republic of Congo, Rwanda, Ethiopia and Kenya have intensified their search for petroleum in their parts of the EARS. This effort is beginning to pay off in countries like Kenya where several discoveries of petroleum have now been made in their part of the EARS.
Can you elaborate on the investment opportunities of the sector?
Investment opportunities exist in all stages of the petroleum value chain such: as exploration, development and production; participation in planned licensing rounds, the earliest of which is being planned to be undertaken during 2015; speculative seismic surveys in Uganda’s sedimentary basins where little or no data has been acquired; drilling and other well services. A total of 116 wells have been drilled in the country to date. This number is expected to more than double during the development and production phases after the granting of production licences. Partnerships with government to develop required infrastructure and create additional training institutions specialising in petroleum disciplines. There are also opportunities in transportation and petrochemicals industries: Pipelines and Storage facilities, power generation by independent power producers, petrochemical industries like production of different types of plastics and pharmaceuticals among others. Another area is services: transport, banking, catering, heavy equipment and machinery, environmental consultancy, accommodation and construction.
Which are the areas where you would like to see increased cooperation with the US?
USA-Uganda relations with regard to oil and gas activities have been on for quite some time now. The government trained some of its staff in this department in the US as far back as the early 1990s. The government undertook a lot of the promotion for petroleum exploration in the US during the 1990s and early 2000s. During February 2012 a delegation from the United States conducted a needs assessment for cooperation with Uganda in the oil sector under the Energy Governance and Capacity Initiative (EGCI) of the US. Various capacity building activities have been undertaken since then. These have included areas like seismic data interpretation, oil industry value chain economics, land use planning especially with regard to the interface between oil developments and communities, oil well core handling and onshore oilfield development among others. Several American Companies are operating and providing services to the oil and gas sector in Uganda. These include; Baker Hughes, Nabors Drilling, Halliburton and Weatherford. These companies also contribute to technology transfer as well as skilling Ugandans in aspects of oil field engineering and well drilling, services. The areas where we would like to see increase cooperation are: Education and research for the oil and gas sector, management of the development and operation of refineries and pipelines and in development and production of onshore oil and gas fields.
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