Did Uganda refuse Iranian refinery offer?

Kampala, Uganda | THE INDEPENDENT | Uganda turned down an offer by the Islamic Republic of Iran to build a mini refinery that should have refined oil from the Albertine region.

It is emerging that the geopolitics around oil and gas played against the Iranian offer as the government of Uganda chose “the balancing action” which saw the Russians and later a US and Italian -led consortia chosen to construct the refinery.

The development of the sixty-thousand (60,000) barrels of oil per day greenfield Refinery in Hoima should have been completed by 2025 or early in 2027.

The refinery deal had in 2015 been clinched by a consortium led by Russia’s RT Global Resources LLC and South Korea’s SK Engineering & Construction Co. to build and operate the refinery. But the Russians could not move it forward because of the EU sanctions. At the time, Sergei Chemezov, the CEO of Rostec Corp which controlled RT Global, had been added to a list of persons affected by EU sanctions against Russia.

The RT Global-led group has been tasked with organizing project finance and engineering. It was to hold a 60 per cent stake in the 60,000- barrels per day refinery. It however pulled out of the deal before talks and key agreements were signed in July 2016.

Rostec had at the time hoped that the “Implementation of the project would strengthen the relations between Russia and Uganda. The first round of bidding was quite competitive with over 75 companies expressing interest. Among those was a consortium led by South Korea’s SK Engineering.

URN could not independently confirm whether there was an Iranian bidder during that round of bidding. But there were indications that Chinese firm Guangzhou Dongsong Energy Group, Maire Technimot from Italy, IESCO from Turkey and Yatra Ventures LLC, and Apro from the USA had been part of the bidding. At the time, Tullow from UK and CNOOC from China were big players in Uganda’s nascent oil industry.

With the global politics at play, sources then indicated that when the Russians were out of the picture, the “balancing action” was used to bring Americans on board culminating in the signing Project Framework Agreement (PFA) with the Albertine Graben Refinery Consortium (AGRC) in 2018.

AGRC rebranded to the Albertine Graben Energy Consortium (AGEC). The AGEC consortium includes YAATRA Africa, Saipem S.p.A, and Baker Hughes. The PFA officially lapsed on 30th June before other agreements could be entered.

Did the government turn down the Iranian offer?

As the Iranian President, Sayyid Ebrahim Rasiolsadati was ending his two-day visit to Uganda, there emerged information that his country had expressed interest to construct Uganda’s refinery including participating in the petrochemical industry. Iran, like Russia, has been under sanctions from the West

Former Bulisa County MP Stephen Mukitale on Thursday revealed that there had been attempts by the Islamic Republic of Iran to help build a mini refinery in Uganda. He told a dialogue on public debt in Kampala that the Iranian offer was declined though he was cagey about the deal.

“We were supposed to have a free mini refinery in 2009 from Iran but because of the new international economic order and the fear of NATO, the President pulled out and we went for the Americans who have kept us waiting. Iran was supposed to give us a free refinery in 2009,” said Mukitale whose former constituency hosts the TotalEnergies Tilenga project.

Iran boasts of a number of refineries. The state-owned National Iranian Oil Refining and Distribution Company (NIORDC) recently entered into a deal with Venezuela to revamp a refinery in Venezuela.

The decision to construct a refinery in the Albertine Graben had been taken around 2009 when Tullow and its partner Heritage had indicated an unwillingness to venture into the refining business.

President Museveni visited Iran in 2009 for a three-day state visit at the invitation of the then-President of Iran, Mahmoud Ahmadinejad. Iran and Uganda reached an agreement concerning the refinery project, as well as other oil and gas developments, during a 3-day visit by Museveni to Tehran, where he held talks with Iran’s President Mahmoud Ahmadinejad.

A communique issued at the end of Museveni’s visit said Iran had signed a cooperation agreement that included funding for the entire “value chain” of Uganda’s oil production.

“Regarding the field of energy in particular, the two leaders agreed to consider cooperation in building an oil refinery in Uganda,” the communique said, adding, “Iran also expressed its readiness to invest in the entire value chain of Uganda’s petroleum industry.”

A statement from the State House at the time of Museveni’s visit to Tehran said the two countries had signed a cooperation agreement to provide funding for the entire “value chain” of Uganda’s oil production.

“The two leaders agreed to consider cooperation in building an oil refinery in Uganda Iran also expressed its readiness to invest in the entire value chain of Uganda’s petroleum industry,” said the statement.

President Museveni on Wednesday confirmed during a joint address with his visiting counterpart, Seyyid Ebrahim Raisoldati that there had been talks about how the two countries could cooperate around oil and gas

“We have some little oil that we discovered some years ago, and I had my arguments with our new oil agents who were saying that we should build a crude oil pipeline but no refinery. I(asked)why? they said there is no profit in the refinery. Then I said if there is no profit, those who build the refinery why do they build them?” said Museveni

“At that time I was lucky I visited Iran. HE Ahmadinejad was the one in charge. I asked him do you have a refinery here? Because I was told refineries don’t make profits. H.E Ahmadinejad said we have nine and we are building more. When I came back, I put my foot down and insisted on a refinery for our oil” Museveni revealed, But he did not say whether Iran had promised to construct one for Uganda.

Speaking through an interpreter, President Seyyid Ebrahim Raisoldati told his host that when it comes to energy and oil and gas, the Islamic Republic of Iran was willing to share its experience with Uganda about refineries.

Seyyid Ebrahim Raisoldati said the Western countries and the system of dominance in the world are not generally interested to see countries that enjoy great resources be independent. He said Iran is doing its best to stop selling its raw materials especially when it comes to the mining, petrochemical, and sectors.

Museveni has taken a similar bold step stopping the export of raw minerals despite almost three years of outcry by some players in the mining sector. The question is whether President Museveni will navigate through the current global politics by defying the sanctions against Iran to allow an Iranian investor or state company to invest in the planned refinery in Kabaale Hoima.

He promised to appoint an official at the Ministry of Foreign Affairs to directly communicate with Tehran on oil and gas.

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URN