Oil tankers delivering fuel to Uganda queue at the Busia border in
Kenya. The country hopes to start selling oil by 2020. FILE PHOTO | NMG
Summary
- 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.
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.
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.
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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