2013 will be great for oil sector

By Haggai Matsiko

Total Launch ready for industry survey of local capacity needs

Loic Laurandel, the General Manager, Total E&P Uganda spoke to The Independent’s Haggai Matsiko about the company’s operations and the current status of the oil industry.

Since you joined the Ugandan oil sector, things have been quiet. Is that what you expected?

May be things have been slow but in terms of operations, we started officially as an operator a year ago, so we are celebrating a year of operations and these last twelve months have been very busy. In our two blocks; EA-1 and A1A, we have carried out a lot of activities. Between March 2012 and now, we have invested US$650 million.

We are still in the process of appraising the discoveries that have been made. We have been involved in some exploration; fortunately we have been successful on the Lyec-1 well, which proved to contain some hydrocarbons. Over all, we have drilled five explorations wells; we have one success which is still a very good ratio in terms of exploration.

How far have the discussions gone as far as the refinery and the pipeline is concerned?

Regarding the whole commercialisation scheme, as you are aware, there are discussions that took place between partners and the government and recently between Total and the President. So that means that the discussions are progressing well.  We expect to reach some conclusions very soon about what will be the best scheme for Uganda.

Because we have to keep in mind that what is good for the investor is good for Uganda. I am pretty confident that with in the first coming weeks, we will have a common ground as far as the global commercialisation is concerned.

Today the refinery is the project promoted by the government. We have to wait for the results of the different studies that the government has commissioned and wait for the final call for tender for the refinery.

Some of your partners are frustrated and are reportedly considering leaving Uganda, as Total are you facing the same challenges?

Total has been in this country for more than 50 years. We have been in the downstream, marketing or petrol station business since 1955 and then the Total brand since 1963, I think. So for us, our commitment is always a long term commitment. It is true sometimes, you could have some specific obstacles to be overcome, that is why we discuss and have a solution.

We are confident that 2013 will be an important year for the Ugandan oil sector and the private investors.

Once legislation is in place, the government will open up new exploration areas, is it worth the excitement as far as Total is concerned?

Today, we do not know exactly which exploration areas will be opened up. So today, it would be premature to make some comments on it because we do not know what these exploration areas will be.  So let us wait for the government to first announce.

Would you say the pace of the industry is healthy and if not what do you advise?

Since we arrived as Total last year, our pace has not been slow.  We had a lot to eat on our plate and this is what we are doing presently. All these projects are not only key projects by the magnitude, by capital expenditures they will imply but they are key projects for the economic development of the country.

So, I think if we are spending six more months in discussing commercialisation plans, I think it is worth it. We are not complaining about the pace. Some external actors could say that the pace is too slow but we are moving according to our pace.

Last year you said that we needed to look at 2017 as the year when production starts, has that position changed?

As far as production is concerned, I remember we said we need three years from the final investment date, which means the date when the final decision to invest is taken. That day hasn’t arrived yet, we think that this date could take place between the end of next year or 2015 which means that production will be expected between the end of 2017 and early 2018.

You operate in the national park, and there are very many concerns from locals, how are you ensuring that you do not affect the biodiversity?

Total is fully committed when carrying out its activities to minimize the impact on both the environment and biodiversity.  We have implemented a huge support team constituting experts in biodiversity, large mammals, and ecology to support our operations.

This team carries out baselines to identify the current situation in the national park such that in the future we are able to monitor the impact of our operations in the national park.

To minimise this impact, we are establishing what is called avoidance maps; we map the critical habitats for instance in terms of biodiversity such that when we are carrying out our operations, there would be no operations in these specific areas.

Total is a very big company, so people look at you as a leader in this sector, what have you done in terms of giving this industry a sense of direction?

We do not pretend that we give this industry a sense of direction. I agree that Total is one of the five majors in the world, which gives us a responsibility. Total is setting high environment standards in operations; either in minimising the impact of our operations on the environment or dealing with the waste issues.

We would also like to be involved in capacity building and have different pillars regarding capacity building. The first one is local content. We have already been involved in promoting for instance the main contracts regarding logistics support, camp management, lifting services, aircraft transportation, and local transportation on site have been awarded to local companies with 100 percent Ugandan ownership. So that is a clear recognition by Total that there are some services which could be provided in the oil and gas sector which fulfill our requirements.

In addition, we are paving away for the future development, we are about to launch an industry survey with a reputable international institution. The proposal of this survey will be two-fold. First of all, the survey will enable us to have a better understanding of what is available in the industry, call it mapping.

We will start with the mapping of what exist in the country. On the other hand we will look at what are the needs for the project, so will be able to identify the gaps and provide the way forward. For instance it could promoting partnerships between local and international companies in construction, in other sectors regarding what is needed for the development.

In the meantime, this survey will give us an idea about what is needed in terms of people’s competences.

Of course, if you are talking about a project of this magnitude, we need a lot of electricians, pipe welders and pipe fitters. And these people have to be trained. But we need to know how many we will need. That is why we did consider that this survey was very important.

But the Association of Uganda Oil and Gas Service Providers (AUOGS) complain that contracts are given to international companies?

The main contractors I was talking about are members of this association. So, as far as Total is concerned; there are no such complaints.

But there are concerns that these companies do not meet international standards, you as Total what have you found out and what do you advise our governments?

When we are working with these companies, they have to apply our standards, and we dedicate a lot of time to discuss these standards with them so that they can build capacity in meeting them. But this is a long lasting process, we are used to it in other countries and this is what we are doing with these contractors. The contractors I am talking about are not small companies, they are big contractors.

There are a lot of allegations coming out of the oil tax disputes in London, allegations of bribery against Tullow Oil Plc. which is your partner. Has this affected Total?

As Total, we have no comments to make on press reports. There is no impact at all on our day to day routine.

What is Total’s position on the Extractives Industries Transparency Initiative and why aren’t you members of the initiative here in Uganda?

In all the countries we are operating; Total is eager to promote the implementation of the EITI process and this is exactly our position in Uganda. We will be promoting the EITI process as we are doing in other countries we operate like Nigeria.