Oil and gas sector advances key projects ahead of production

Energy Minister Ruth Nankabirwa shares progress on the refinery, EACOP, and related projects

Kampala, Uganda | JULIUS BUSINGE | Uganda’s oil and gas sector has received a comprehensive update on the progress of key projects, including the refinery and the East African Crude Oil Pipeline (EACOP), during a briefing by Energy Minister Ruth Nankabirwa.

These pivotal initiatives, critical to the nation’s strategic interests, must be completed on schedule to harness the anticipated benefits of first oil production set for the coming year.

Nankabirwa said on Jan.23 that the US$4bn refinery – falling under the midstream cluster of oil and gas could finally take off soon. She said a Memorandum of Understanding was signed on December 22, 2023, between the government and Alpha MBM Investments LLC from the United Arab Emirates, outlining cooperation and negotiation terms for the project.

Negotiations of the key commercial agreements between the Government and Alpha MBM Investments LLC commenced on January 16, 2024, and are expected to be concluded within three months, she said.

This development emerged after the Project Framework Agreement with the Albertine Graben Energy Consortium expired on June 30, 2023, and was not renewed, and President Yoweri Museveni directed a shift to a public sector-led project.

The Ministry of Energy and Mineral Development subsequently engaged stakeholders to develop a strategy for the refinery project. Expressions of Interest (EOIs) were received from several potential investors and evaluated which brought to the fore Alpha MBM Investments LLC. The facility is expected to refine 60,000 barrels of oil per day.

The EACOP

Subsequently, after the EACOP Company received its construction license in January 2023 under the Petroleum (Refining, Conversation, Transmission and Midstream Storage) Act, 2013, it kicked off its activities.

Following the issuance of the License, EACOP Company has issued contracts for construction and line pipes. Early civil works are underway in Tanzania, with Nyanza Roads Ltd and JV Spec handing over Main Camps and Piping Yards to the China Petroleum Pipeline Engineering Company (CPP) for pipeline construction.

The EACOP project spans approximately 2,740 acres in Uganda, affecting 3,660 individuals, with 177 requiring resettlement housing. All resettlement houses have been constructed and handed over.

At least 95% of the affected persons have signed compensation agreements, with 91% of these compensations completed. The remaining payments are ongoing.

There are 116 cases under consideration for compulsory land acquisition due to reasons such as untraceable individuals, landowner disputes, and refusal of compensation offers.

Before we broke off for the festive season last month, the first 100km of the pipeline was leaving Dar es Salaam to a coating plant in the town of Isaka, Western Uganda.

The EACOP and the refinery are critical projects that must be accomplished according to the schedule so as not to compromise investments in the upstream projects of Tilenga – manned by TotalEnergies and Kingfisher – operated by CNOOC.

At Tilenga, significant progress has been made in developing the Industrial Area, which will host a Central Processing Facility (CPF) capable of handling 190,000 barrels alongside drilling support bases and accommodation camps.

Over 85% of the Industrial Area has been assigned to contractors like Schlumberger, China Oil Services Limited Uganda, ZPEB, Vallourec, and McDermott & SINOPEC, who are actively working on various aspects of the project.

Meanwhile, at Kingfisher, the development plan features a Central Processing Facility with a 40,000-barrel capacity and 31 wells across four well pads.

The CPF at Buhuka flats in Kikuube is under construction. The design and procurement are managed in China, with on-site construction and installation progressing in Bugoma. China Offshore Oil Engineering Company (COOEC) and China Petroleum Engineering and Construction Corporation (CPECC) are the main contractors.

Since the landmark discovery of oil in 2006, Nankabirwa said, Uganda has upheld the highest environmental, industrial, legislative, and regulatory standards. The sector significantly contributes to the country’s GDP, amounting to USD8.6 billion, and has created over 12,000 jobs. This is the beginning of a long-term economic upliftment, promising benefits for the next 25 years.