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Investments in oil and gas to hit $20bn
Ernest Rubondo, the executive director of the Petroleum Authority of Uganda recently told the Uganda Chapter of the Society of Petroleum Engineers that investments in Uganda’s oil and gas industry will hit the US$20b mark, between now and when Uganda eventually starts producing oil in 2020.
These investments could include at least three new companies bringing in new money as they explore for more oil in the Albertine Graben once negotiations with the government over Production Sharing Agreements are concluded.
The entry of new exploration companies in the country should be a sigh of relief for the government that is interested in licensing of more acreage in the country in order to expand the country’s hydrocarbon resource base.
Experts in the sector say the two-year slump in the oil and gas industry could finally be coming to a close. An annual survey released in September by Deloitte, an international audit and financial advisory firm reported that about 60% of oil and gas professionals believed the recovery had already began or would begin in 2017.
Even though the current state of the oil and gas market was far from the desired situation, top oil and gas executives showed renewed confidence in an industry recovery.
Those interviewed by Deloitte pointed to expectations of rising prices, a return to increasing capital expenditures and headcount as drivers of their optimistic outlook. Deloitte’s survey reveals that right from the upstream to downstream level; most respondents expect to see an increase in capital expenditures in 2017.
In fact, the upstream sector— which took the hardest hit in this downturn— is the most optimistic about a recovery, followed by the midstream.
The return of optimistic sentiment indicates that the industry downturn may finally be over, and suggests low to modest industry growth over the next year, with a full recovery by the end of the decade.
Local content
Whatever the sentiment, Emmanuel Mugarura, the chief executive officer of the Association of Uganda Oil and Gas Service Providers says the next phase of Uganda’s oil and gas development will find interested local companies more prepared than they were three years ago.
Many companies, especially those involved in logistics, transport, warehousing, camp management and catering services are in a better state than they were in 2013, Mugarura says.
He says the association has not only sent their staff for training but it is also trying to encourage local partnerships.
Close to 30 companies, including those involved in logistics, transport, construction, warehousing and waste management have had their staff trained on health, safety and environment standards, one of the important requirements that are required to operate in the industry.
“Instead of waiting for Threeways to get a European partner, we are now saying, let Threeways, Bemuga, Globetrotters and Spedag build a consortium such that if the oil companies want 200 trucks, each of them can contribute 50 and get the contract,” he said.
Irene Muloni, the Energy and Mineral Development Minister recently said the government is in ‘fast-track mode’ in building infrastructure for oil production.
