Oil final investment decision expected by end of March -Minister

Kampala, Uganda |  THE INDEPENDENT |  The Minister of Energy and Mineral development Mary Goretti Kitutu has disclosed that the Final Investment Decision (FID) for oil production will be taken before the end of March 2021.

Kitutu made the disclosure during an interface with the Parliamentary committee on Natural Resources on Wednesday that needed some clarifications on the sector’s Budget Framework Paper for the next financial year.

FID represents the point at which the international oil companies (IOCs) and the Government of Uganda through the Uganda National Oil Company (UNOC) will commit to oil field development.  The project execution phase should commence shortly after FID with significant expenditure on building the production facilities.

The Executive Director of the Uganda Petroleum Authority (PAU) Ernest Rubondo told MPs that before the end of the first quarter of the Calendar year the FID will be taken and following this, four main projects will take shape with each of the projects costing over $3bn.

He disclosed that oil will not begin to flow until after a three year construction period.

He listed the projects as the production in Kilenga at Buliisa operated by Total E&P and Tullow Oil, the production at the Kingfisher oil field in Kikuube district operated by CNOOC, the development of the crude oil pipeline from Hoima to Tanga and the development of the Refinery.

He appealed to the MPs that the PAU will have to be adequately funded in order to meet the challenges of regulating the industry in light of the extensive investments he outlined.

Rubondo stated that the authority has been underfunded and yet the regulation of the projects which will be running concurrently is critical, and says the authority will be expected to perform several functions on the ground including receiving data plus processing it.   He warned that without the additional funding, the consequences of no regulation would be dire.

According to the authority’s presentation before the MPs, the PAU funding allocation for the 2021/2022 financial year is 53.02bn shillings, leaving a funding shortfall of 136.138bn shillings.

For instance staff training requires an allocation of 7.398bn shillings but only 450.25m has been provided additionally regulation and monitoring of upstream petroleum operations requires 27.45bn shillings but only 1.5bn shillings has been provided.

Rubondo emphasizes that since the country is implementing maiden projects the staff need to be trained to regulate and monitor these projects.

Rubondo also states that the Authority will need additional staff in order to bring staff levels from the current 165 to the approved structure of 283 staff.

The minister stressed that it is critical to have the authority well-funded such that there are no delays once the FID is finalized between February and March 2020.

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