Oil tankers delivering fuel to Uganda queue at Busia Kenya border. The
2020 evacuation target has gathered political undertones. PHOTO FILE |
NATION
President Yoweri Museveni’s determination to have Uganda enter
the international oil market by 2020 is getting caught up in logistics,
with preparatory work on the investment unlikely to be completed before
the turn of the year.
Joint venture partners involved
in the country’s oil sector said they were unlikely to complete the
final technical study for the Buulisa oil blocks by the December 31
ultimatum.
The the study, called front end engineering
design (FEED) which started in February this year usually takes between
12 and 18 months to complete. That places the completion date anywhere
between March and August next year.
FEED focuses on technical specifications of the project and the cost estimates; initially put at $10 billion.
After
it is completed, a detailed design will follow enabling partners Total
E&P, Tullow Oil and China National Offshore Oil Company decide how
much money they will put in the project. Fluor and CB&I are doing
the study.
The 2020 evacuation target has gathered
political undertones with President Museveni said to be keen to have the
project running before the 2021 elections in which he is expected to
contest, after Parliament last week voted to remove the age limit of 75
for presidential candidates. President Museveni is 73.
Ego trips for leaders
Big
infrastructure projects in East Africa have recently become ego trips
for leaders. Kenya’s President Uhuru Kenyatta was keen to have oil from
Turkana hit the export market just before the general election in August
this year.
His ambition came unstuck because of
logistical challenges but he managed to pull through the standard gauge
railway between Mombasa on the Coast and Nairobi.
Tanzania’s
President John Magufuli has targeted the development of the Central
Corridor — including the pipeline that will evacuate crude oil from
Uganda — linking Dar es salaam to Bujumbura, Kigali and Kampala as one
of his flagship projects.
President Paul Kagame
targeted improvements in tourism and trade services leading to reforms
that saw the Rwanda Convention Centre built and the country relax visa
restrictions.
Oil prices
Although
the delay in bringing oil to the ground could hold back revenues, it
could turn out to be a blessing in disguise as international oil prices
show signs of steady recovery from a trough that has persisted for more
than three years. The partners, however, maintain the market entry
target is still feasible.
“All parties are fully
committed and are endeavouring to achieve the targeted date of end
2020,” said Total’s spokeswoman Ahlem Friga-Noy.
Fluor
and CB&I are competing to be the contractor of the oil
infrastructure after Technip was edged out in the first phase of the
design completed in July.
“Fluor and CB&I have
been selected to undertake the second phase of the front end engineering
design. The best contractor at the end of the second phase will be
selected to undertake the engineering, procurement and construction of
the project,” said Ms Friga-Noy.
Thereafter the
preferred contractor will again be selected to for remaining works,
including establishing a 200,000 bop central processing facility.
In
August 2016, the Energy Ministry issued eight production licences to
Total E&P Uganda and Tullow Oil Uganda. The licences contain about
5.4 billion barrels of crude out of an estimated volume of 6.5 billion
barrels.
“The companies are expected to work towards
reaching final investment decisions within 18 months after issuance of
the production licences and first oil in the year 2020,” energy and
mineral development minister Irene Muloni said in February.
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