By Joan Ahumuza
Uganda’s Energy Minister Irene Muloni said on Wednesday that she is optimistic the government can resolve a tax dispute with oil companies in time to get first oil flowing by 2023.
Muloni said she expected a Final Investment Decision (FID) from oil companies Tullow, France’s Total and China’s CNOOC by the end of the first quarter next year, over an oil export pipeline through neighbouring Tanzania.
The FID on developing the 230,000 barrel per day project, and the pipeline, has been delayed by the tax dispute with the Ugandan authorities but Muloni said the government had offered a solution.
“We have engaged with the companies. We have offered them a solution,” Muloni said at the Africa Oil Week conference in Cape Town.
“We are hopeful that between now and the end of the year they will re-engage to try to find a solution,” she said, adding that it would enable first oil through the pipeline by 2023.” She added.
On Wednesday, Tullow Chief Executive Paul McDade told media that the company would not take an FID on the project until they were able to resolve the dispute and sell down their stake.
Once pipeline construction begins, Muloni said it would take 2-1/2 to three years to complete.
She said separately that Uganda invited bidding on five other blocks.
“We want to commercialize our resources. It is exciting times for Uganda, we are now preparing for production,” Muloni said at the conference.
She noted that “It has taken us some time, but we are there. The exploration discovered six billion barrels and we have plans to recover about 1.4 billion of these. And now the issue is to get that out of the ground. We’ve already agreed with Tullow, Total and CNOOC the way forward to commercialize that oil.”
Minister Muloni also said that “We need two big destinations. One is access to the international markets through the pipeline to add value and ensure security of supply within the East Africa region. Also, we are importers of petroleum products, so we have a refinery under development.”
That refinery is planned for Kabaale in Western Uganda’s Hoima district, along the eastern shore of Lake Albert, close to the border with the Democratic Republic of Congo.
Once the refinery is completed, expected to be in 2022, it will produce kerosene, gasoline, diesel, heavy fuel oils for Uganda and other local markets.
In addition to the refinery an airport, hospital and a 100-megawatt thermal power plant are being constructed.
“For these two big projects the pipeline is more advanced with the FEED signed and an intergovernmental agreement with Tanzania. We are now negotiating the host government agreements between us and setting up the private companies that are going to own and operate the pipeline. For the refinery we’ve already approved the configuration of the refinery that will handle 60,000 barrels per day. Those two projects are ongoing and as a country we are preparing the infrastructure,” Muloni noted.
With the Lake Albert oil beginning to flow, Uganda has set its sights on further resources and in May governemnt announced a second licensing round for additional oil exploration in five blocks in western Uganda that will be announced before the end of 2019.
“It is all about attracting companies to come and join us in the exploration. We have only licensed about 15% of the resources but the appetite is there because the parameters are world class. The success rate when you drill is hovering around 85%, meaning every time you drill a hole there is a good chance of success,” explained Muloni.