Oil & Gas: What Final Investment Decision Means For Ugandans, Economy

Lead partners in a group photo after announcing the FID

International Oil Companies (IOCs) led by TotalEnergies and  China National Offshore Oil Company (CNOOC) Tuesday afternoon joined the  Uganda National Oil Company (UNOC) announced the Final Investment Decision (FID) for Uganda’s oil and gas projects.

The announcement was made by TotalEnergies Chairman and Chief Executive Officer Patrick Pouyanne at an event held at Kololo Independence Grounds amid thunderous applause from guests.  The Final Investment Decision (FID) was officially launched by President Yoweri Museveni. The announcement means that construction works on Tilenga, Kingfisher and the EACOP (East African Oil Pipeline) can now take off with TotalEnergies,  CNOOC,  UNOC and Tanzania Petroleum Development Corporation  (TPDC) as lead partners.

Speaking at the event, Uganda’s  Energy Minister, Ruth Nankabirwa said  total investment after the FID will be above US$10 billion (UShs34.9bn).

The Minister said the investments will create over 160, 000 jobs for Ugandans and a growth to the country’s GDP ratio of 22%.

Nankabirwa noted that the announcement also means that Ugandans can supply goods and services, contribute to the country’s debt repayment, increment in the tax base and that the country can also invest more in infrastructure.

Irene Batebe, the Energy Ministry Permanent Secretary said the announcement means that proceeds from the activities can go a long way in eradicating poverty through job creation. This, she said, is because local participation is at the core of the project.

Uganda National Oil Company Chairman,  Emmanuel Katongole said that the announcement comes with a lot of responsibility on the Petroleum Authority of Uganda (PAU) as well as other key sector players.

Katongole said that if it were possible, the first oil should flow out of the ground at least by 2024 and not 2025 as planned because “Ugandans are eagerly waiting to taste the fruits of oil.”

He added that time is now  to work together and ensure that a reasonable portion of the US$ 10 billion investments  is retained by Ugandans.

Speaking at the same event, Tanzania’s Vice President Philip Isdor Mango said that on the Tanzanian side, the government has given the Petroleum Development Corporation TShs259.96 billion as equity to participate in the East African Oil Pipeline project.

According to Mpango, the project will at least create 10, 000 jobs for Tanzanians and Ugandans. He says Tanzania will earn over US$3.5 billion in the next three years from foreign direct flows.

His Ugandan counterpart President Yoweri Museveni described the announcement as very important, not only for Uganda but the entire region. He said the money will boost the economy.

“I salute you and congratulations to CNOOC and TotalEnergies for reaching this conclusion,” Museveni said.

He added: “Our agenda is that we can have the pipeline for oil to Tanzania and then a counter-gas pipeline flowing to Uganda. We have no gas here, yet it is very important.”

Museveni said some people are worried that our crude oil could Kudiba (not have a market) but this is impossible.

“ I have a shirt that is 65% polyester. When talking about phasing out petroleum, they are referring to fuel for cars, but petroleum will be used for many other things like polyester, etc,” the President said.

According to  Patricia Ojangole, the CEO at Uganda Development Bank, the FID will boost Uganda’s economy, support Ugandan firms, transfer technology, create jobs, and reinforce the process of industrialization.

“UDB is excited to work with local businesses to embrace this opportunity to grow economic impact of our communities,” Ojangole said, adding: “ This is a turning point for the Oil & Gas sector as it commits substantial funds ($15 billion) for the development of infrastructure for commercialisation of oil with a potential countrywide impact on the economy.”