Insurance companies to share oil sector risks, benefits

Kampala, Uganda | JULIUS BUSINGE | As Uganda makes steps towards getting first oil in 2020, insurance companies are working on mechanisms of partnering to share risks and benefits that will manifest.

Speaking to journalists on the sidelines of a press conference on the upcoming oil and gas convention to be held in Kampala next week, Maurice Amogola, the Chief Executive Officer for a brokerage insurance firm, Minet said local insurance companies in Uganda will insure most of the local risks such that the liabilities that would manifest in the process are shared with other international insurance companies.

“Depending on the balance sheet of each company, they will retain part of it (premium) but the rest of it will have to be reinsured so that when losses occur they are shared in equal measure,” Amogola said. But insurance brokers like Minet, will be paid commission for helping insurance companies – which take risks – in getting insurance deals.

Government officials say billions of dollars are going to be invested in the sector in the coming years. Over US$15bn is being sunk in the oil and gas sector on key projects like the refinery, pipeline, airport, roads and more ahead of oil production in 2020.

An estimated 6.5 billion barrels of oil would be drilled, 1.4 billion of which are recoverable by foreign companies –Total E&P Uganda, Tullow Uganda Operations Pty Limited and China National Offshore Oil Corporation (CNOOC), who are holders of production licences in the Albertine Graben located in the Western part of the country.