Uganda Announces Final Investment Decision bringing Country closer to First Oil

By Musisi Yiga John Updated at 1016 EAT on Saturday 5th February 2022

Uganda’s President Yoweri Kaguta Museveni, has witnessed the announcement of the Final Investment Decision (FID) for Uganda’s oil and gas Projects by the TotalEnergies EP Uganda, CNOOC Uganda Limited, the Uganda National Oil Company (UNOC), and the Tanzania Petroleum Development Corporation (TPDC). The ceremony, which took place at the Kololo Independence Grounds in Kampala was also attended by His Excellency Phillip Isdor Mpango, the Vice President of the United Republic of Tanzania.

President Yoweri Kaguta Museveni, has witnessed the announcement of the Final Investment Decision (FID) for Uganda’s oil and gas Projects – Courtesy photo

“I know many of you now feel excited about this day, but I am not intoxicated with this oil money, this has been a long journey stretching way back in 1986 when we started sending our own Ugandans to go and study to understand what oil is, so I congratulate these companies upon reaching this milestone,” remarked the President.

The President also alleyed fears about Uganda’s oil project that it will not progress due to the energy transition, because oil has multiple uses apart from fuel.

His Excellency Phillip Isdor Mapango, the Vice President of the United Republic of Tanzania, said that “this is indeed a momentous occasion that marks the beginning of the next phase and chapter for Uganda and Tanzania and the East African Region”.

The FID announcement signifies the commitment of the oil companies to invest close to US$ 10 billion to develop Uganda’s oil and gas resources through the implementation of the Tilenga Project in Buliisa and Nwoya districts; the Kingfisher Project in Hoima and Kikuube Districts (approximately US$6-8bn); and, the East African Crude Oil Pipeline (EACOP) that will cross the ten (10) districts of Hoima, Kikuube, Kakumiro, Kyankwanzi, Gomba, Mubende, Lwengo, Sembabule, Kyotera and Rakai in Uganda.

“This officially marks the beginning of the detailed Engineering, Procurement and Construction (EPC) phase by the Joint Venture Partners and, therefore, a commitment to see first oil by 2025, a journey that started in 2006. It is during this phase that we expect Ugandans to accrue significant benefits and opportunities from the sector through local content,” remarked Hon. Dr. Ruth Nankabirwa Ssentamu, Minister for Energy and Mineral Development.

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This is in addition to Government’s consistent efforts in improving infrastructure required to support the oil and gas developments by constructing the Hoima International Airport (approx. US$800m) with works currently at close to 70% completion of the first phase and 700 kilometres of oil roads (approx. US$900m).

Mr. Patrick Pouyanne, the CEO and Chairman of TotalEnergies who led the Joint Venture Partners (JVPs) in announcing the FID, said the development of Lake Albert resources is a major project for Uganda and Tanzania, and their ambition is to make it an exemplary project in terms of shared prosperity and sustainable development.

“It is a masterpiece of a project and will be achieved at low cost and with a low carbon footprint,” Mr. Pouyanne said of Uganda’s oil project adding that it comes at a time when the world is facing an increased demand for fossil fuel.

Mr. Chen Zhuobio, the CNOOC Uganda President, revealed that his company is to invest USD 1.6 Bn in the Kingfisher project and close to USD 400M will go to local service providers.

“Achieving FID for the Kingfisher Project is a great milestone to advance the development of the oil and gas resource in Uganda. The diligence, leadership and support from key stakeholders have largely contributed to the attainment of this breakthrough” stated Mr. Zhuobiao.

Uganda’s interests in both the upstream and midstream projects are held by the UNOC that has already secured part of the funds required for the initial investment in the EACOP project. “We want to see first oil, if possible, even before 2025, now that the commitment has been made”, said Mr. Emmanuel Katongole, Board Chairman, UNOC.

“We have already received USD 130M for our initial investment in the EACOP and we hope to get the remaining capital soon,” said Ms. Proscovia Nabbanja CEO, UNOC, adding that the UNOC’s investment in the upstream will be borne by the JVs TotalEnergies E&P Uganda and CNOOC Uganda Ltd, until first oil.

“FID is one of the important steps in Uganda’s journey to First Oil as it signifies that Uganda’s oil and gas sector remains profitable, even amidst the challenges related to the volatile crude oil prices and the ongoing COVID-19 pandemic. FID, therefore, unlocks the single highest value project in the country, that will bring in an investment of close to $15bn in the next three years within Uganda,” said Irene Batebe, Permanent Secretary Ministry of Energy and Mineral Development.

According to Mr. Ernest N.T. Rubondo, Executive Director, Petroleum Authority of Uganda (PAU), contracts worth US$ 6 billion for over 40 work packages for the Tilenga, Kingfisher and EACOP projects have been submitted by the licensees to the PAU for approval before award. “The Scope of companies being regulated by the Authority is increasing significantly to include world-class contractors who are setting up base in Uganda. Ugandans should therefore continue preparing for the direct and indirect opportunities that are now becoming clearly visible”, he said.

The FID announcement now unlocks the biggest opportunities for Ugandans with over 16 fields ring-fenced for local entities. A ramp up in activities is now expected with award and confirmation of contracts and tenders for the construction phase before the first oil expected in 2025. The partners also made a commitment to ensuring environment and social protection in the development of the projects.

“Announcement of FID is a significant milestone for the country, but also comes with a very big responsibility on the work of all stakeholders involved in the management and development of the country’s oil and gas sector,” said Ms. Jane N. Mulemwa, Board Chair PAU.

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