Nidhi Verma and Promit Mukherjee
Uganda expects to begin producing oil in 2022, its energy minister Irene Muloni said on Wednesday, indicating a slight delay from the east African country’s revised target of 2021.
Uganda discovered crude reserves more than 10 years ago but production has been repeatedly delayed by disagreements with field operators over taxes and development strategy.
A lack of infrastructure such as a transportation pipeline and a refining facility have also held up output.
“Production we are now looking at by 2022, our first production, from Kingfisher and Tilenga blocks,” Muloni said on the sidelines of the Petrotech conference.
China’s CNOOC and France’s Total and London-based Tullow Oil have the stakes in the two areas. CNOOC is the operator of Kingfisher area while Total leads the development of Tilenga.
“We are preparing for production. We have to build a pipeline for exports and a refinery to add value. So unless those two projects are done we can’t start producing,” she said.
In April 2018 Uganda signed a deal with a consortium, including a subsidiary of General Electric, to build and operate a 60,000 barrel per day (bpd) refinery that will cost $3bn-$4bn. The refinery is expected to be operational by 2023.
Muloni said land-locked Uganda, which imports refined fuel, will announce its next exploration licensing round in May.
A final investment decision for the refinery will be taken by September 2020 and the project is expected to be completed in three years, she said.
A crude export pipeline, which passes through Uganda’s neighbour Tanzania, with a capacity to transport 260,000 bpd oil will be built by 2022, Muloni added.
Emmanuel Simon Gilbert, head of downstream operations at Tanzania Development Corp, said Tanzania expects to take a 15%-25% stake in the planned 1,500km pipeline, which he said is estimated to cost about $3.5bn.
Uganda will also take a stake in the pipeline project with the majority share being held by Total, he said, adding that the intergovernmental agreement between the two nations has to be signed before moving to a next stage.
“Ugandan oil is heavy and you need to install heaters along the way at four or five different locations… So it is a bit challenging,” he said of the planned pipeline.