Ugandan companies earned UGX 3.5 Trillion in exploration phase of oil and gas

Kampala, Uganda | THE INDEPENDENT | Ugandan companies earned a total of USD 943m (3.5 trillion shillings) in the exploration stage, the first phase of the oil and gas activities, the government has said.

Ernst Rubondo, the executive director of the Petroleum Authority of Uganda (PAU) said the companies that earned were in the areas of logistics and transport, civil works, consultancy, and catering among others. These companies employed 9,000 people both directly and indirectly, the government says.

Rubondo said on Friday, oil companies spent as much USD 3.5bn (13 trillion shillings) at the exploration stage.

The exploration stage involves the actual search of the oil. The oil companies, some of which have since quit Uganda, combed much of the Albertine region until 2006 when it was officially announced that Uganda had found hydrocarbons.

The country now says it has up to 6.5 billion barrels of oil with 1.7 billion barrels commercially viable. But as the companies explored, Ugandans benefited.

Rubondo said that while in the first phase, Ugandans expertise and standards were low, many of the deals went to foreigners. Even then he said, what Ugandans earned shows they did well.

On employment, he said of all the registered oil companies in the country, 81 percent of the 251 employees they had were Ugandans at the end of 2019.

Uganda hopes to start actual oil production after 2023. Projects worth billions of dollars are in plans including the refinery and the pipeline. According to industry estimates, oil companies are expected to spend an additional $15-$20bn in the next stages of oil development.

Uganda has come up with the local content regulations to ensure that Ugandans and their companies are contracted to do some of the contracts. The government has registered 1,774 companies have been registered in the database of the oil and gas suppliers. This gives them visibility companies, Rubondo says.

Andrew Kasekende, the director at ICS Engineering and Environment Limited said Ugandan companies should use the current ‘lull’ to prepare for the industry and beyond.

He said the industry was a finite one and within a few years after the start of production, some companies’ skills may be rendered obsolete.

This means that companies can prepare for the oil and gas sector but they should look into other sectors beyond hydrocarbons.

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