Turkish company to build a refinery in Uganda

Geza Ulole

JF-Expert Member
Joined
Oct 31, 2009
Posts
65,136
Reaction score
91,917
USINESS

Uganda shortlists four firms for oil refinery project

Uganda plans to construct an $4.27 billion electrically heated pipeline transporting 200,000 barrels of oil per day. TEA GRAPHIC | NATION MEDIA GROUP

IN SUMMARY

  • There have been eight companies/consortia in the bidding, which the Ministry of Energy had been considering.
  • A decision needs to be reached soon to enable the joint venture partners – CNOOC, Total and Tullow – to make their final investment decision by December 2017.


Uganda has shortlisted four companies from which it intends to select the bid winner to construct its $4.27 billion oil refinery, Energy Minister Irene Muloni has announced.

“We hit a snag last year when we were about to sign with the Russians who pulled out. Now we have four consortia, that appeared to be of interest for us, and which we feel have the capacity. We will pick the winner from among these to build the refinery,” Ms Muloni said on April 25.

She was chairing a ministerial session during the joint Uganda Chamber of Mines and Petroleum, Uganda Freight Forwarders Association and Private Sector Foundation Uganda inaugural regional logistics expo and the third annual oil and gas convention that took place in Kampala from April 25-27 2017.

Robert Kasande, acting director of the refinery in the Petroleum Directorate, was also guarded but told The EastAfrican that an announcement “will be made within a month.”

However, sources familiar with the oil-related deals and tenders told The EastAfrican that there have been eight companies/consortia in the bidding, which the Ministry of Energy has been considering.

These are SNC Lavalin of Canada, Yatra Ventures LLC and Apro, both from the US and IESCO of Turkey.

The others are Chinese firm Guangzhou Dongsong Energy Group, Spain’s Profundo, Bantu Energy, a Canadian and Ugandan consortium as well as Italy’s Maire Tecnimot.

Uganda picked a consortium led by RT Global Resources of Russia ahead of South Korea’s SK Engineering, to build the 60,000 barrels-a-day project, but the Russians pulled out citing Uganda’s failure to meet a fresh set of demands.

The government on the other hand argues that the Russians made fresh demands after matters had already been concluded, prompting Kampala to call off the negotiations.
Ms Muloni said a decision needed to be reached soon to enable the joint venture partners – the three oil companies CNOOC, Total and Tullow – to make their final investment decision by December 2017.

The investment decisions revolve mainly around the $3.5 billion East African Crude Oil Pipeline from Hoima district in western Uganda’s Albertine Graben to Tanga port in Tanzania, for which a Front End Engineering Design (FEED) is ongoing and expected to be complete by August this year.

The 1,445-km line will be the longest electrically heated pipeline in the world, transporting 200,000 barrels of oil per day.

The FEED will detail technical requirements such as the layout of 36 well pads, technology required to drill 400 wells, and estimated cost of the infrastructure to start production on Exploration Area 1 and Exploration Area 2.

In short, the FEED, which will also suggest engineering designs for the proposed 200,000 barrels central processing facility, will inform the joint partners on the actual cost of the pipeline.

Another key project is the refinery, also to be located in Hoima, for which financing needs to be determined - The project developer owns 60 per cent stake, with other participating parties taking up 40 per cent.

The refinery development also includes a product pipeline that starts in Hoima and terminates at Buloba, west of Kampala.





Back to The East African: Uganda shortlists four firms for oil refinery project

Uganda shortlists four firms for oil refinery project

MY TAKE
From SGR in Tanzania snatched by a consortium of Turkish n Portuguese company that builds Bugesera airport in Rwanda to now a chance for a refinery in Uganda. Kenya's SGR project under Chinese should be worried. Equatorial Guinea's President that invested $500 mln in Juba's oil projects was in Kampala of recent n rooted for joint pipeline btn Uganda, DRC CONGO n South Sudan. Atalizwa mtu hapa..


nomasana, sam999, NairobiWalker, hbuyosh, msemakweli, simplemind, Kimweri, Bulldog, MK254, Kafrican, Ngongo, Ab_Titchaz, mtanganyika mpya, JokaKuu, Ngongo, Askari Kanzu, Dhuks, Yule-Msee, waltham, mombasite gabriel, Juakali1980, Boda254, mwaswast, MwendaOmo, Iconoclastes, oneflash, Kambalanick, 1 Africa, saadeque, burukenge, nyangau mkenya, Teen-Upperhill Nairobi, kadoda11
 
Dealmaker Nguema reaches out to Museveni, signs MoU on oil and gas

Tullow workers at a rig in Buliisa in western Uganda. The country's oil and gas sector is expecting inflows worth about $8 billion, and hopes to produce its first oil in 2020. FILE PHOTO | NATION MEDIA GROUP

In Summary

  • President Nguema arrived in Uganda for a two-day state visit on April 26 at the invitation of President Yoweri Museveni.
  • Uganda’s oil and gas sector is expecting inflows worth about $8 billion as the country goes into a race to produce first oil in 2020
  • President Nguema and his government have been at the centre of recent oil deals in South Sudan’s oil and gas sector.
  • Industry watchdog Global Witness says the Equatorial Guinea president and his regime of corrupt officials have kept three-quarters of the population below the poverty line, and accuses him of using the country’s oil wealth “to enrich himself and his family..."


Just weeks after linking an oil exploration company to South Sudan and signing an oil information sharing agreement with the government in Juba, Equatorial Guinea President Teodoro Obiang Nguema Mbasogo flew to Kampala to sign a memorandum of understanding with Uganda on oil and gas.

President Nguema arrived in Uganda for a two-day state visit on April 26 at the invitation of President Yoweri Museveni.

The two leaders held talks and signed four memoranda of understanding on trade, cultural and economic, oil and gas co-operation and establishment of a permanent joint commission for co-operation.

Initially, President Nguema’s visit had been linked to Kampala’s military training mission in the oil-rich Central African country, but it turns that out the veteran leader is assuming the role of dealmaker in the region’s oil and gas sector in East Africa.


Equatorial Guinea President Teodoro Obiang Nguema Mbasogo. PHOTO| AFP

Uganda’s oil and gas sector is expecting inflows worth about $8 billion as the country goes into a race to produce first oil in 2020, hence President Nguema’s visit; and that it coincided with a regional oil, gas and logistics convention in Kampala, takes on a bigger significance, analysts argue.

They cite recent deals, which President Nguema and his government have been at the centre of in South Sudan’s oil and gas sector.

On March 6, the South Sudanese government signed a deal with Nigerian oil exploration firm Oranto Petroleum to invest $500 million in the country to develop South Sudan’s oil Block B3, covering 25,150 square kilometres.

Oranto was linked to Juba by the Equatorial Guinea president, whose government also signed an oil information sharing agreement with South Sudan two weeks later.

While in Kampala, President Nguema addressed the oil, gas and logistics convention, sharing the experience of his country, which has become one of Africa’s major producers of oil in less than two decades.

President Nguema, who seized power in 1979, has presided over what has been described as one of the world’s “most oil-fuelled corrupt and nepotistic,” countries where his sons and other relatives run the oil and other key sectors.

Equatorial Guinea discovered large oil reserves in 1995; within a decade the country’s production rose from 17,000 barrels of oil per day (bpd) in 1996 to a record 375,000 bpd in 2005 when it was ranked the third-largest oil producer in sub-Saharan Africa, behind only Nigeria and Angola.

Currently producing 300,000 bpd, Equatorial Guinea has over the past eight years, earned on average $5 billion per year in oil revenues. Oil and gas account for 90 per cent of Equatorial Guinea’s GDP, 87 per cent of fiscal revenues and 89 per cent of exports (2015).

With a population of about less than 1.2 million, the country is enormously wealthy but this wealth is concentrated in the hands of a small minority. With oil and natural gas production, the country boasts the highest level of GDP per capita in sub Saharan Africa, at $38,699 per year in 2016.

Despite corruption, nepotism and mismanagement, the country has attracted some of the world’s biggest investors in the oil sector — from China, France, Spain and the US — because there are good prospects of more discoveries.

ExxonMobil was the first oil major that launched Equatorial Guinea’s production phase, with Hess and Marathon Oil soon followed the US oil giant, to develop the country’s natural gas reserves.

Public spending driven by oil revenues has seen a construction and infrastructure boom since around 2009; airports and roads have been built, and water supply and electricity services are also better in the country’s capital.

Industry watchdog Global Witness says President Nguema and his regime of corrupt officials have kept three-quarters of the population below the poverty line, and accuses him of using the country’s oil wealth “to enrich himself and his family, while violently suppressing opposition and ignoring the suffering of his people.”

President Nguema’s interest in the region’s oil and gas is, therefore, generating immense interest among observers.

Speaking at the conference, President Nguema told business leaders and government to develop a logistics industry and create good transport links with other oil producing and exploring neighbours South Sudan and the Democratic Republic of Congo, which require infrastructure to export their crude.

In 2016, the Equatorial Guinea Minister for Mines, Industry and Energy said his country was moving ahead with projects that would make the Central African country a regional hub for petrochemicals, which come from petroleum and natural gas, but also, that his country was on course to becoming to a crude oil and petroleum products storage hub.

Dealmaker Nguema reaches out to Museveni, signs MoU on oil and gas
 
Sasa tena ni turkey [emoji23][emoji23]russia na south korea walikataa?
 
Its time tanzania realises that no one wants to fund uganda for that refinery ..hiyo 2020 deadline yao hawataiweza ..
 
eddy25r said:
Its time tanzania realises that no one wants to fund uganda for that refinery ..hiyo 2020 deadline yao hawataiweza ..
Click to expand...
angalia ulivyo mjinga ungakuwa smart ungejiuliza makubaliano ya Nguema na Mseveni! Kumbuka Tanzania na Uganda wame-commit around 16% ya share yake kati ya 40% zilizotengwa kwa EA! Kingine Erdogan anakuja Kampala soon kuhitimisha the deal endelea kukengenua!
 
High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our T&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights.
Subscribe to read

Uganda’s oil reserves bring promise of work and infrastructure Country’s reputation for corruption gives analysts reason for concern Drilling down: labourers working for Tullow Oil in Uganda Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) 0 Print this page April 27, 2017 by: John Aglionby in Kampala

The discovery of large oil reserves in Uganda in 2006 led to widespread expectations that the economy would quickly be transformed. The dream is now set to become a reality.

Production licences have been issued for three blocks, a deal has been struck for the route of the pipeline to take the oil to the sea, and the final preparatory studies have begun. Infrastructure construction has started and the government has set up the Petroleum Authority to regulate the industry. Exploration licences have also been issued for new areas. “This project is in a better place than it has ever been,” says Jimmy Mugerwa, country general manager for Tullow Oil, the London-listed company that discovered crude near Lake Albert in western Uganda.

Total — the French oil company that is developing the fields along with Tullow and China’s Cnooc — expects the project to produce oil by 2020. Tullow, however, is no longer an operator. Over the past 10 years it has sold stakes to Total and Cnooc, both much bigger players in the industry. Tullow now has 12 per cent of the three fields being developed, estimated to contain 1.7bn recoverable barrels of oil. At full production, the fields are expected to produce up to 230,000 barrels a day. Tullow estimates the cost of production at $25 a barrel.

The big spending is expected to begin next year. Irene Muloni, the energy minister, puts the cost of building the upstream facilities and pipeline at up to $10bn, while the refinery that Uganda wants could be another $4bn.

Ministers can’t afford to mess up. The eyes of the world are on them Svein Heglund Mr Mugerwa — who also chairs President Yoweri Museveni’s task force on oil, minerals and energy — believes the projects will create about 15,000 direct jobs, of which 60-70 per cent will be Ugandan. Including indirect employment, the projects are expected to generate about 150,000 jobs.

A significant challenge will be to meet the legal requirement that 48 per cent of services used by the oil industry, measured in monetary terms, are Ugandan.

In some technical areas, the country has virtually no capacity or experience and so regulations have been issued to waive the law in these areas. But Mr Mugerwa believes there is no reason why sectors such as catering, transport and security should not be almost entirely Ugandan. Ms Muloni acknowledges the 48 per cent threshold is unlikely to be met across the board. “Let’s just try our best,” she says. “We’re telling Ugandans to take advantage of the opportunities.

” One crucial unfinalised part of the development is the pipeline, which at 1,445km will be the longest electrically heated pipeline in the world. Under pressure from Total, Mr Museveni chose to route the pipe though Tanzania after its president, John Magufuli, offered a much cheaper and more secure deal than his Kenyan counterpart.

There has also been intense debate over whether Uganda needs a refinery. Ms Muloni admits refineries “have small margins”, but says there are more strategic considerations. “When you look at a country [such as Uganda] that is landlocked and imports all its oil, this will guarantee security of supply.”

Her plan is for the refinery to have an initial capacity of 30,000 barrels a day — 7,000 more than Uganda’s demand. The surplus will probably be exported and Kenya has expressed interest in contributing to the construction. But Ms Muloni’s attempts to find a developer have twice failed. The project is back out to tender and she hopes to have a deal finalised by the end of the year.


Irene Muloni: ‘Education, health, everything — it all depends on a stable energy supply’ © Reuters

Uganda’s next big challenge will be managing the billions of dollars it is expected to make over the 20 years of production. All profits are to be paid into a newly created petroleum fund, developed with help from Norway, which has a similar set-up. The proceeds will be used to fund infrastructure and other development projects.

Svein Heglund, a senior adviser in the Norwegian government’s Oil for Development programme, says: “The ministers and directors are dedicated. But they can’t afford to mess up. The eyes of the world are on them.”

Considering Uganda’s historic reputation for endemic corruption, local analysts and activists are sceptical that everything will go smoothly. “The question is over execution once the oil starts flowing,” says Bernard Tabaire, a political and media analyst. “Who is controlling the money? We’ve had major corruption in all big projects so why should this be any different?”

He points to what has become known as the “handshake scandal”, when it was revealed this year that 42 officials shared 6bn Ugandan shillings ($1.7m) for the part they played in the government securing about $700m in two tax disputes with Heritage Oil and Tullow.

“They were just doing their jobs, they did nothing special,” Mr Tabaire says of the officials. “This is a clear red flag. It tells me that if you can behave like this before the oil starts flowing this is a window on to what is likely to happen later.”

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.

Subscribe to read
 
Geza Ulole said:
Wivu wa nyang'au hunishangaza
Click to expand...
Wivu??? Don't be ridiculous!! Ama ni yako sasa unadhani wengine pia wako kama wewe?? Kenya we don't envy silly things, but big things, Like projects in Angola and Nigeria, Tanzania and Uganda are too low to be envied, we also envy the smartness of Kigali Rwanda, it is lovely and organized.
Anangwe bringing us news live from Kigali on a car free
Sunday





Angola Housing Project


This is the things we envy
 
You must log in or register to reply here.
Menu
Log in
Register
Cookies are required to use this site. You must accept them to continue using the site. Learn more…