AFRICANGLOBE – Uganda on Wednesday signed a Memorandum of Understanding (MoU) on the sustainable development of petroleum resources discovered in the country with licensed oil companies.
The signing of the memorandum is seen as the first step in speeding efforts to start oil production, while offering a roadmap for the commercialisation of petroleum resources.
“The purpose of the MoU is to provide a framework for achieving a harmonised commercialisation plan for the development of the discovered oil and gas resources in the country,” read a statement from Energy and Oil Development minister, Irene Muloni.
“The plan includes the use of petroleum for power generation, supply of crude oil to the refinery to be developed in Uganda by government and export of crude oil through an export pipeline or any other viable options to be developed by the oil companies.”
Among the companies which the government signed the MoU are CNOOC Uganda Limited, Total E&P Uganda, Tullow Uganda Operations Pty Limited and Tullow Uganda Limited.
The MoU requires the oil companies to support government efforts to develop the refinery including public endorsement of the project and also requires government to provide support to the oil companies.
Government support to oil companies will include the acquisition of approvals for studies and surveys for an export pipeline and to initiate discussions with neighboring countries in relation to cross border frameworks for the pipeline.
Uganda says it plans to develop a refinery with an input capacity of 60,000 barrels per day.
The partners are expected to develop a pipeline or other viable options to export crude oil.
The MOU also provides for the expansion of the refinery beyond 60,000 barrels per day in the event that additional resources are confirmed in the licensed areas.
In the short term and prior to the refinery coming on stream, the companies will supply crude oil from the contract areas to be used for power generation. Excess associated and non–associated gas will be used for power generation or any other viable option.
The commercialisation plan is based on the current discovered recoverable reserves in the country, estimated at a range of 1.2 to 1.7 billion barrels of crude oil.
“My ministry is taking forward the development of Uganda’s refinery and is now acquiring 29 square kilometres of land in Hoima district for the project through implementation of a resettlement action plan.
“The signing of the MoU is, therefore, a significant step towards the production of Uganda’s discovered oil and gas resources,” Muloni said.
Uganda recently issued a production licence at the Kingfisher Field operated by China National Offshore Oil Corporation (CNOOC).
CNOOC has now commenced the development of the field, which is expected to take a period of four years before production can commence.