Oil pipeline project

[darcity]

Bado Profesa Muhongo hajautangazia mappato ya gesi

 

[Geza Ulole]

Russian, Chinese, And ROK Investment In Oil: Exclusive With Uganda's Finance Minister, Part II
Oil and gas is likely to be a particularly active area of investment for East Africa over the next few years. In 2006, Uganda discovered what it claims is 6.5 billion barrels of crude. Uganda is planning a 60,000-barrel-per-day refinery that should produce $3 billion per day in earnings (at $50 per barrel).

In this 2010 file photo, an oil well undergoes testing in the Lake Albertine region of western Uganda. Uganda’s hopes to produce crude oil by 2018 have been boosted by an agreement to build a pipeline to Tanzania’s Tanga port, a government official said Tuesday, April 26, 2016. AP Photo/Monitor Publications Ltd, File.

“We have oil, which has already been proved is available in fairly good quantities,” said Uganda’s Finance Minister Matia Kasaija in an exclusive interview with me on Tuesday last week. He said there are areas in Uganda that have not yet been fully explored for oil, which is an opportunity for international investors .

Uganda is also planning additional infrastructure to facilitate oil and gas production. A petro-chemical plant and geo-thermal plant will support oil and gas production, according to Mr. Kasaija. “We want to produce 100 megawatts to support our electrification project,” he said. Ambassador Kintu Nyago, Deputy Permanent Representative of Uganda to the U.N., was also at the interview and communicated by email afterwards. He said a new airport will be useful in the oil region. “The Government of Uganda wants to secure investors who could build an airport at Hoima, to service the oil belt,” he wrote in an email.

To get the oil and gas to port, a new 1,403 km pipeline is planned, as well as 205 km of pipeline associated with a new refinery. The pipelines will bring oil and gas from Uganda to coastal shipping terminals in Tanga, Tanzania. The $3.6 billion Tanzania pipeline route was chosen instead of a Kenyan route, which was previously under consideration. According to Mr. Kasaija, the companies that own the oil field concessions, Tullow Oil (U.K.), CNOOC (China), and Total SA (France), “want to do [the work] themselves.” They will bring in workers from abroad to implement their projects. Only CNOOC has a production license.

Uganda expects a joint pipeline-refinery project to cost approximately $4 billion. The first phase was due to be operational in 2018, and the second phase in 2026. But Russia’s RT Global Resources Consortium, which led the effort, abandoned it this month. The consortium previously said it would take 5 years to complete.

RT is owned by Russia’s Rostec, a defense and technology conglomerate which produces arms like the Kalashnikov rifle. Uganda has purchased more than $700 million worth of fighter jets from Rostec since 2011, and used Russian tanks to defend South Sudan in its civil war.

Rostec’s chief executive, former KGB agent Sergei Chemezov, is an ally of President Putin, and subject to sanctions stemming from the invasion of Ukraine. When RT won the contract, the Financial Times saw it as a sign of Uganda’s “growing ties” with Moscow, and said that Uganda “increasingly characterizes the West as a neocolonial aggressor.” At the time, the Financial Times cited a source close to President Museveni which said that Mr. Museveni is a personal friend of Mr. Putin, and that both “share an appreciation for strongman diplomacy directed against the west.” Due to Russia’s failure to sign the contract, days before the scheduled signing, Uganda’s attitude towards Russia may now be changing.

Uganda had negotiated over a year with the Russians on this deal. Low oil prices and December 2015 sanctions against Rostec arising from the occupation of Crimea and the Donbass in Ukraine, are the likely causes of a lack of Russian capital for the project, and the withdrawal of the winning bid. Rostec was a target of the sanctions, and in March indicated they would attempt to capitalize major projects such as the Ugandan refinery with Chinese or Indian loans. But that did not materialize, and now RT has pulled out of the Ugandan refinery deal completely.

“We are linking up the refinery, together with the pipeline,” the Finance Minister said. “If the refinery doesn’t take off quickly enough, then the production also will delay. That is why when the Russians did what they did, many of us were quite unhappy.” The resulting one or two-year delay in oil production, according to Mr. Kasaija, will delay Uganda’s industrialization program for the same period.

The refinery delay will likely delay all planned oil production, and is creating worries about “debt distress” in Uganda if oil production does not materialize by 2020. In addition to the Russian withdrawal from the refinery, disagreements over taxation, field development strategies, and the pipeline have all been blamed for the delays.

Uganda is now scrambling to find a new lead partner for the refinery, and they are starting with the companies that previously displayed an interest. South Korea’s SK Engineering & Construction was one of several additional companies in the RT-led group, including Telconet Capital, VTB Capital and Tatneft JSC. Japan’s Maruben Corporation also bid on the project. After RT pulled out, Uganda decided to invite the South Korea-based company, chosen as the alternate bidder, to submit a new proposal. SK previously competed against RT for the contract, and lost. According to Mr. Kasaija, Uganda’s Energy Ministry invited SK to discussions regarding a new potential bid, and SK is considering the invitation.

Uganda has high hopes for getting a refinery deal with SK on track. Mr. Nyago said, “The political will of the Koreans is there. As you may remember their President was in Kampala.” The Finance Ministry will join the discussions after technical details are complete and financial matters are ready to be addressed. Mr. Kasaija’s ambitious goal is to have the refinery, and resulting flow of oil revenues, operational by 2019 or 2020.

This is Part II of a three-part series based on a July 19, 2016 exclusive interview with the Finance Minister of Uganda, Mr. Matia Kasaija. Part I covers Uganda’s macro-economy, and Part III covers infrastructure investment.

Please follow me on Twitter @anderscorr, and send ideas and information to corr@canalyt.com.

Russian, Chinese, And ROK Investment In Oil: Exclusive With Uganda's Finance Minister, Part II

 

[sokoine elisha moses]

hiyo ndio duru yetu ya maendeleo east africa

 

[Geza Ulole]

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UPDATE 1-Uganda says to grant oil production licences to France's Total
Wed Aug 3, 2016 2:09pm GMT
((Adds details from statement,)

By Elias Biryabarema

KAMPALA Aug 3 (Reuters) - Uganda's cabinet agreed on Wednesday to allow the energy ministry to grant three oil production licences to France's Total, the presidency said.

Commercial crude reserves were discovered in the east African country a decade ago but production has been repeatedly delayed amid wrangling over taxation and field development strategy.

The absence of key infrastructure, such as a crude export pipeline, has also slowed progress to production.

According to a statement issued by the president's office, the cabinet approved a request from the minister of energy to allow the issue of three petroleum production licences to Total E&P.

The licences cover the Ngiri, Jobi-Rii and Gunya fields in the Albertine rift basin, the area along the country's border with the Democratic Republic of Congo.

The licenses will be valid for 25 years and can be renewed for an additional 5 years, the presidency said in the statement.

Total is the second oil firm to be offered a production license after one of its partners, China's CNOOC.

Tullow Oil, which also co-owns fields with Total and CNOOC, has also applied for production licences and has been waiting for approval for years.

In April, Uganda agreed with Tanzania to jointly develop a pipeline to the Indian Ocean port of Tanga to help export Uganda's crude reserves, which are estimated at 6.5 billion barrels.

(Editing by Louise Heavens)

© Thomson Reuters 2016. All rights reserved. Users may download and print extracts of content from this website for their own personal and non-commercial use only. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters and its logo are registered trademarks or trademarks of the Thomson Reuters group of companies around the world.

Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.

UPDATE 1-Uganda says to grant oil production licences to France's Total | Reuters

 

[Geza Ulole]

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[Geza Ulole]

Three oil companies agree to construct oil pipeline in Tanzania
in General Energy News 08/08/2016

Tanzania government says three oil firms operating in Uganda— London-listed Tullow Oil, France’s Total and China’s CNOOC – have all agreed to participate in the construction of the pipeline.

The building work is scheduled to start by June next year.
Land-locked Uganda found crude oil reserves estimated by government geologists at 3.5 billion barrels in Hoima near the border with the Democratic Republic of the Congo in 2006.

The jointly developed pipeline will carry Ugandan crude oil to Tanzania’s Indian Ocean port of Tanga for export.
Britain’s Tullow Oil, with stakes in both countries, had backed the Kenyan route, saying it would be cheaper if oil from both pipelines followed the same route.
Source: TVC News

Three oil companies agree to construct oil pipeline in Tanzania | Hellenic Shipping News Worldwide

 

[Geza Ulole]

Uganda learns from Chad on Refining of Oil

ByCaroline Njoroge
Posted on August 10, 2016

“I congratulate President Idriss Deby for his foresight of building this refinery. Some countries produce petroleum but don’t refine it. Now Chad produces oil and consumes it. In Uganda, we have some oil wells and that is the route we are taking,”

PRESIDENT YOWERI MUSEVENI RECEIVED BY HIS CHADIAN COUNTERPART IDRISS DEBY ITNO AND OTHER CHADIAN GOVERNMENT OFFICIALS/NEW VISION


President Museveni has been in Chad picking some lessons on oil refinery even as the country works towards the achievement of a similar goal. Chad is Africa’s seventh largest oil producer at 180,000 barrels per day. The refinery capacity is 20,000 barrels per day, enough to meet the country’s domestic consumption.

In 2011, Chad started refining oil at the Djarmaya Oil Refinery after several countries had refused to finance the project, arguing that it was unprofitable. It was not until a Chinese company, Chinese National Petroleum Company Incorporation (CNPCI), brought in 60 per cent investment that construction for the refinery went ahead. The Chadian government contributed 40 per cent of the investment.

When President Museveni suggested Uganda would construct an oil refinery for Uganda’s oil, there was a concern it would be an unprofitable venture. But the President argued that there was no need to export crude oil yet the domestic market has the capacity to consume refined products.


“I congratulate President Idriss Deby for his foresight of building this refinery. Some countries produce petroleum but don’t refine it. Now Chad produces oil and consumes it. In Uganda, we have some oil wells and that is the route we are taking,” said President Museveni during his two day visit to Chas as he toured Djarmaya Oil Refinery.

The President said Uganda hopes to start with a refinery producing 30,000 barrels per day and later increase the capacity to 60,000 barrels per day. Government is currently negotiating with a conglomerate led by a South Korean Firm, SK Energy, with the expectation the latter would bring in at least 60 per cent of the funding.

The Uganda government is planning for both with the oil companies financing the crude oil pipeline.


Uganda learns from Chad on Refining of Oil – The Exchange

 

[Geza Ulole]

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[Geza Ulole]

Govt agrees to set up oil fund for businesses
Written by Edward Ssekika
Created: 24 August 2016

Government has agreed to establish a local content fund to facilitate the financing of local enterprises participating in the oil and gas sector.

The proposal and commitment to establish a local content fund is contained in the draft National Content Policy for the Petroleum Subsector 2016, which was released recently.

The policy acknowledges that access to finance is one of the biggest bottlenecks hindering local companies and enterprises from fully participating in the oil sector. The policy notes that more than 90 per cent of the private sector is comprised of small and medium enterprises, employing an estimated 2.5 million people. But many of these are constrained by the limited access to finance.

“Access to finance is one the key obstacles undermining the ability of SMEs to acquire inputs, skilled personnel and equipments, develop technology and infrastructure required to achieve competitive in business… It is therefore necessary to establish a fund to support and address the capital needs of Ugandan enterprises in the petroleum subsector,” the policy reads in parts. The policy is expected to lead to the enactment of a Local Content Act, which will promote local investments in the oil and gas sector.

Recently, Bernard Ongodia, a senior geophysicist in the petroleum directorate in the ministry of Energy and Mineral Development, said the draft policy is now waiting cabinet approval. He emphasized the need for a fund.

“Without such a fund, there is no way we can achieve all our local content aspirations as a country,” he said.

In its initial stages, the local content fund is expected to finance capacity-building of local enterprises and later support local businesses.

According to the policy, government is to establish a local content steering committee to be comprised of permanent secretaries of all key ministries such as education, energy, local government, among others, to ensure that the oil industry complies with local content requirements, in addition to quarterly and annual report by oil companies to the Petroleum Authority of Uganda (PAU).

The association of Uganda Oil and Gas Services Providers (AUOGS) has been pushing government to establish a local content fund. Oil-producing countries such as Nigeria, have established such funds.

Speaking at a local content conference organized by Advocates Coalition for Development and Environment (ACODE) at Hotel Protea in Kampala, last month, Jeff Baitwa, the group managing director of Threeways Shipping Services limited, said access to the ‘right finance’ is critical in building the capacity of local businesses in the sector. Threeways Shipping Services Ltd is one of the local companies providing forwarding and clearing services to the oil sector.

“Many of our members [Association of Uganda Oil and gas Services Providers] have a problem with banks. We closed activities in 2013 and to date there are no activities, yet they borrowed from banks. So, many are almost becoming bankrupt. That is why the establishment of a local content fund to provide for long-term financing at affordable interest is a must,” he said.

Some of the local companies like Bemuga Clearing and Forwarding are already on the list of distressed companies seeking a Shs 1.3 trillion government bailout.

POLICY

The policy identifies the existing gaps such as the lack of enough skilled and semi-skilled labour in relevant technical areas such as mechanical technicians, civil craftsmen and welders, poor standards and limited access to finance among others, and proposes how these gaps will be plugged.

It is estimated that the workforce requirement during the peak period of field development and construction of pipelines and the refinery will be 161,700 jobs, of which 14,000 will be direct jobs, 42,700 indirect jobs and 105,000 induced jobs, according to a baseline survey that the three major oil companies conducted last year.

Of this workforce, 15 per cent are likely to be engineers and managers, 60 per cent technicians and craftsmen and 25 per cent unskilled labourers. The policy seeks to put in place a strong legal and institutional and administrative framework for national content in the sector.

Some of the proposals aimed at maximizing local content in the sector include: set national content targets, the creation of a national supplier database and the establishment of a human capacity register, among others. The policy’s major aime is to promote the actual utilization of locally-produced goods and services and building capabilities and human resource for the sector.

“The country’s current education and training institutional set-up is not aligned to the needs of the petroleum sub-sector and consequently the available skills and competencies on the market do not match with the needs of the industry.

The universities and training institutions in the country have been offering general engineering and business programs that are not relevant to the supply of skills for the oil and gas industry. In addition, these institutions are not internationally recognized and accredited as training and education institutions for the oil and gas industry,” the policy reads.

The policy observes that the number of Ugandans trained in vocational and technical courses has declined, as emphasis has been concentrated on university education. In addition, the qualifications are not certified as required by the industry.

As a result, few Ugandans have been able to secure employment in the international and competitive oil and gas industry. According to the policy, the country, in collaboration with international institutions, will establish a certification program for skills and competencies required in the petroleum sub-sector.

The expected expenditure for upcoming projects such as the construction of a crude export pipeline, an oil refinery, development of current fields and the attendant infrastructure is approximately $20bn.

In order to benefit, Ugandans need to tap into this money. According to the policy, tenders in the sector are often too big and require significant financial resources, which is a challenge to many Ugandan enterprises.

“The size of tender bids should not be too big to discourage small enterprises in the petroleum sub-sector due to their limited technical and financial competence and capacity,” the policy reads.

Govt agrees to set up oil fund for businesses

 

[Geza Ulole]

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[NairobiWalker]

Yani hadi leo huu mradi haujaanza? It's four months since the time it was supposed to commence hahaha! Akina Geza bado wanatupa hadithi za so and so agrees....waah!

 

[Naby Keita]

Yani hadi leo huu mradi haujaanza? It's four months since the time it was supposed to commence hahaha! Akina Geza bado wanatupa hadithi za so and so agrees....waah!

Una uhakika

 

[Geza Ulole]

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[KeMzalendo]

I always wonder, It was reported in many media houses that UG opted for the arusha route coz Total was willing to finance this project. Yet to date no one has come forth to finance it. Hapa naona UG itachezwa. Total oil may just decide to finance it when UG is desperate and charge an arm and a leg to use it. Watch this space.
The Russians have already hinted at reduced capacity of the refinery from 200k bopd to 30k bopd. And that the Ugandan govt takes a higher equity. Looks like no one wants to take higher risk in the refinery.
Thank God, they spared Kenyans the agony of working with Total oil.

 

[KeMzalendo]

Kenya may just build its pipeline before the Tanzania pipeline. Few interested partners involved. And the cost of $2b is not very high. Split 3ways that is $600m. Between tullow, maersk and gok. Plus the 1st berth in lamu will be ready by 2018 and the other 2 by 2020.
Uganda may eventually regret their choice of the Tanga port.

 

[Naby Keita]

Kenya may just build its pipeline before the Tanzania pipeline. Few interested partners involved. And the cost of $2b is not very high. Split 3ways that is $600m. Between tullow, maersk and gok. Plus the 1st berth in lamu will be ready by 2018 and the other 2 by 2020.
Uganda may eventually regret their choice of the Tanga port.

Kwa hio?

 

[KeMzalendo]

The trickle down effect of positive financial impact may be low and protracted. Project may take longer than anticipated and when completed the cost will be higher meaning the return per barrel of oil lower to the Ugandan govt.
But well, they made their bed. Time to lie on it.

 

[Naby Keita]

Endeleeni kujifariji

 

[Typical]

Utaratibu wa kupata kazi mbali mbali za makampuni ya kitanzania kwenye mradi zipojee??

mwenye uzoefu/ujuzi/taarifa please share

 

[rais wako]

Hahaha tulia Wewe hiyo miez minne ya kusaini mou na different studies unaona ni muda mrefu. Mbona nyie mliingia makubaliano na Uganda toka mwez wa nane mwaka Jana mpaka tunakuja kuwanyang'anya mradi mlikua mmetumia muda gani?? Chill out broo

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