Oil production to start in 2020

HON LOKERIS trade 3718Uganda’s first oil production has now been pushed to 2020.

In the meantime two EAC Member States – Kenya (2.5%) and Tanzania (8%) have confirmed participation through public shares for the development of a 60,000 barrels per day Greenfield refinery in Kabaale, Hoima district.

The Minister of State for Minerals, Hon. Peter Lokeris, said that government and the oil companies are taking all the necessary steps in accordance with the MoU entered into “with respect to commercialization of the oil and gas discoveries to ensure that first oil is delivered in 2020.”

Minister Lokeris was giving an Update on Petroleum Sector Activities to Parliament in the sitting on Thursday 8 December 2016.

“Upon conclusion of successful negotiations, it is expected that a total of five new exploration licences will be issued after Cabinet approval,” said Hon. Lokeris.

He said that government was currently in the process of identifying the Private/Lead developer to partner with on the project, estimated to cost US$4billion.

The Minister said that the licensing round has progressed to the stage of negotiation of Production Sharing Agreements (PSAs), starting in August 2016.

He explained that negotiations are ongoing between government and  Armour Energy Limited for Kanywataba Block; Waltersmith Petroman Oil Limited for Turaco Shallow and Deep Plays;  Oranto Petroleum International Limited for Ngassa Shallow and Deep Plays.

Lokeris said that key institutions created to manage the oil sector include the Directorate of Petroleum, to advise the Minister on Policy matters; the Petroleum Authority of Uganda (PAU), to carry out regulatory functions; and the Uganda National Oil Company (UNOC), to carry out business activities.

“The performance of the above-mentioned institutions is going to be impeded by lack of adequate and timely funding unless the Public Finance Management Act is amended to provide for direct funding,” he said.

Members wondered why how government would guarantee that human rights of people living in the area are respected and what roles have been given to Special Security Forces in the oil mining areas.

Members also asked the Minister to justify the change of the oil pipeline route, from Kenya to Tanzania, where it would cost more.

The Minister said that at the 13th Northern Corridor Integration Project (NCIP) Summit held on 23rd April, 2016 in Kampala, a decision was taken to develop a crude oil export pipeline from Kabaale, in Hoima District of Uganda to Tanga Port in Tanzania.

“The 1445 km long, 24-inch diameter, heated pipeline is being developed to provide access for Uganda’s crude oil to the international market,” he said.

He added that the pipeline is planned to be developed within an integrated utility corridor which will accommodate a highway, power transmission, and Information Communication and Technology (ICT) infrastructure.

The Speaker of Parliament, Rt. Hon. Rebecca Kadaga, who chaired the plenary sitting, asked the ministries of Finance, Industry and Energy to present a new comprehensive statement detailing responses to all concerns raised by Members during the debate.

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