HomeEast AfricaUganda seeks investor for US$2.5 billion oil refinery

Uganda seeks investor for US$2.5 billion oil refinery

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Kampala, Uganda — 08 Uganda 2013 – The government of Uganda is looking for a lead investor to develop a refinery estimated to cost US$2.5 billion, as it seeks to exploit reserves only two weeks after issuing its first production licence to China National Offshore Oil Corporation.

“The investor, either a company or a group of them, will be named by April and will take an interest of as much as 60% in the facility, which will have a capacity of 60,000 barrels a day,” assistant commissioner in the Energy Ministry Robert Kasande told Bloomberg News in a telephone call phone from Entebbe, near the capital.
Uganda, classified as one of the world’s poorest nations by the World Bank, discovered oil in 2006 and has an estimated 3.5 billion barrels of crude, according to the Energy Ministry.

 London-based Tullow Oil plc, Cnooc and France’s Total SA are jointly developing the finds. The country has sub-Saharan Africa’s fourth-biggest oil reserves.

“We need to finalise this process we have started today by April,” said Kasande. The cost is still “tentative” as the accurate amount will be known only after the investor conducts a feasibility analysis, he added.
The government’s stake in the facility will account for as much as 40%, and the nation has invited Kenya, Rwanda, Burundi and Tanzania, which are partner countries in the East African Community, to buy an interest of as much 10% in the facility from Uganda, he said.

The refinery may be developed in two phases, starting with a daily capacity of 30,000 barrels, Kasande explained. Construction will commence in 2015, and production is scheduled to start in 2017, he said.

The government secured 29sq km of land for the refinery in the western district of Hoima and will hand it over to the investors by April after compensating affected residents, Kasande continued.

The Energy Ministry on September 25 awarded Cnooc the first production licence to develop the Kingfisher area in the Albertine region at a cost of US$2 billion over four years. The area is estimated to hold 635 million barrels, of which 196 million barrels are recoverable.

Kingfisher will pump 30,000 barrels to 40,000 barrels a day, the ministry said.

Tullow and Total will get oil-production licences for other areas “within weeks,” Peter Lokeris, the minister of state for mineral development, said last week.

Uganda is eyeing both local and regional markets for its oil products, said Kasande.

Landlocked Uganda is also negotiating with oil companies to build a pipeline to the Kenyan port of Lamu, according to the Energy Ministry. President Yoweri Museveni and his Kenyan counterpart Uhuru Kenyatta agreed to develop the link in June, saying it would also have a loop to South Sudan.

Uganda has sub-Saharan Africa’s biggest oil reserves after Nigeria, Angola and South Sudan, according to the International Monetary Fund.

Source: Bloomberg News. For more information, click here.