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‘Uganda’s Energy Mix A Great Investment Opportunity’

Irene Muloni, the Ministry of Energy and Mineral Development, has revealed that 90% of Uganda’s energy mix is from renewable sources.

 “There is vast potential for renewable energy sources from the various water bodies in the Country,” she noted.

 This was during the Ministerial Panel at the 26th Africa Oil Week (AOW) 2019 in Cape Town, where energy Ministers from Africa; Uganda, Ghana, Mali, Cote d’Ivoire, the Democratic Republic of Congo and Rwanda discussed national hydrocarbon strategies. 

Uganda’s strategy, she said, is to optimize the investment benefits from the petroleum sector in order to develop durable sustainable infrastructure and acquire technology that will facilitate investment in renewable sources of energy among others.

The Africa Oil Week brings together a wide network of global oil and gas operators, contractors and Governments in Africa. Twenty-five (25) ministers and close to 1500 delegates from over two hundred and fifty (250) countries were in attendance.

Uganda’s Second Licensing Round

The Minister invited companies to bid for the five (5) highly prospective blocks; Avivi, Omuka, Kasurubani, Turaco and Ngaji in the ongoing second licensing round which was announced in May, 2019.

This was during the Uganda National Showcase, which was held on the sidelines of the Africa Oil Week. The deadline for responding the Request for Qualification for the Second Licensing Round is on 31stDecember, 2019.

“The entire Albertine basin is de-risked, some of these five blocks neighbor the other development projects (Tilenga and Kingfisher), and the support infrastructure, making them highly lucrative,” she said. All of the five blocks have good quality seismic and other data.

Uganda is looking to increase the country’s resources with, 90% of the Albertine basin currently unlicensed. Preliminary exploration work in other basins is also ongoing, and an oil seep has been encountered by the Ministry’s technical teams in the Moroto Kadam basin, providing evidence of a working petroleum system.

The Road to First Oil: Development of the Discoveries

The Government and the International Oil Companies (IOCs) are striving to fast track the processes to first oil.

“Tullow’s planned farm down to raise funds to reinvest in the sector is appreciated. Government has intervened to resolve the standoff, in order to fast track the achievement of the Final Investment Decision by the end of the first quarter of 2020,” Hon. Muloni said.

Uganda together with joint venture partners are working to ensure that the development and production stage of discovered commercial is expedited.   Key milestones on the road to first oil have been achieved. These include, the establishment of institutional framework, legislation and the conclusion of key the Front End and Engineering Designs (FEED) and the Environment and Social Assessment (ESIA studies). 

Uganda’s strategy for attracting funding for the oil projects is focused on project financing.  “UNOC on behalf of the Government of Uganda is a shareholder in the Upstream developments and, both the refinery (40%) and the East African Crude Oil Pipeline (15%) projects that have a capital requirement of US$ 3.5 billion each,”  Gilbert Kamuntu, the Chief Commercial Officer UNOC revealed during a panel discussion on raising finance for nationally transformative projects.

Local Content Development

The government of Uganda in partnership with the private sector has undertaken capacity building initiatives and enterprise enhancements to ensure optimal participation by Ugandans.

“The laws are a deliberate effort to build the capacity of the private sector along the entire petroleum value chain.”  Provision of local content is part of the policies and laws governing the sector. Sixteen opportunities have been ringfenced for Ugandan enterprises.

Peninah Aheebwa, the Director Technical Support Services from the Petroleum Authority of Uganda (PAU) highlighted what the country wants to achieve in terms of local content in the oil and gas sector. This was during the African Local Content Forum that was held during the AOW 2019.

“The government has clearly defined what the value created within the country should be,” she said.

The key pillars are; the employment of Ugandans, the use of goods and services locally made or manufactured in Uganda, transfer of knowledge and technology, research and development, and enterprise development.

Initiatives like in-country accreditation and certification of Ugandans is ongoing. 700 technicians have so far been trained and certified internationally and 200 government staff have been trained in different technical skills to effectively handle the oil and gas sector.

Together with the private sector, enterprise development is ongoing to enhance the capacity of SMEs to take part in the petroleum value chain.

Ernest Rubondo, the Executive Director of the PAU said that Uganda has realistic local content goals, based on various studies undertaken by the Government and the industry to better understand the capacity within the country.

Legislative and Institutional Reforms

“The oil and gas sector in Uganda is being managed inline with industry best regulatory practice, which provides for separation of the licensing, regulatory and commercial roles between the Ministry, PAU and the Uganda National Oil Company (UNOC), respectively”, Mr Rubondo added.

 Uganda has been commended for laying a robust legal and institutional framework to manage the sector before oil production begins.

“African countries such as Uganda have undertaken institutional and Legislative reforms in order to create a favorable investment climate. Uganda has set up an independent regulatory body, the Petroleum Authority of Uganda. Our Government is supporting the US led consortium, the Albertine Graben Refinery Consortium, that plans to construct the largest refinery within the East African Region.,” Steven Winberg, the Assistant Secretary, United States Department of Energy remarked during his keynote address at AOW.

NosizweMacamo, the chairperson Friburge oil and gas, an indigenous company from Angola commended Uganda for implementing a strategy that focused on building capacity in Government and legislative reforms, prior to oil production.

“Uganda’s strategy to first develop local technical capacity in the sector has paid off. Other oil producing countries, especially in Africa are doing this, after they have produced for decades, and have suffered the consequences of weak legal frameworks among other pitfalls. We can learn a lot from Uganda.”

So far, Uganda has made twenty-one (21) discoveries, with 88% drilling rate, and six (6) Billion (Bn) barrels of which 1.4Bn barrels are recoverable. Nine (9) production licenses has been issuedto Total E&P, CNOOC Uganda Limited and Tullow Uganda. Three (3) exploration licenses were issued to Oranto Petroleum Limited and Armor Energy.

 “Uganda is open for business,” the Minister concluded.

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