A Review of the Nigerian Energy Industry

In Uganda, private firms make Sh450bn from oil

Tullow26 November 2013, Kampala – Tullow Oil has spent over $200m (Shs 450bn) in its dealings with over 550 local businesses since 2004, it emerged last week. The figure is contained in the latest Tullow Uganda country report, launched at Kampala Sheraton hotel on Friday. Titled Creating Shared Prosperity in Uganda, the report documents Tullow’s activities and investments over the last nine years.

Launching the report, Tullow General Manager Jimmy Mugerwa, said the money had helped several firms grow, while allowing Tullow to manage its risks.

“As we progress towards development, these investments are expected to increase exponentially. Ugandans must, therefore, continue to prepare themselves to benefit from these developments,” Mugerwa said.

He added that over the nine years, Tullow had invested $2.8bn (approximately Shs 7 trillion) in oil and gas exploration and acquisition of Heritage oil’s interests in Uganda. Tullow has also invested up to $1.8m (Shs 4.6bn) in social investments in education and health, among other corporate social responsibility ventures.

The company is currently preparing to transform from exploration to production of oil.

“The development phase will take approximately three years after the final investment decision. This implies timely completion and approvals of the field development plans which will lead to getting the final investment decisions by various company boards within the next 24 months.” Mugerwa said.

He revealed that the estimated capital investment for the upstream development of Uganda’s resources discovered in the Lake Albert rift basin could reach $12bn (Shs 30.6 trillion).

Mugerwa said commercialization of Uganda’s oil and gas resources would generate up to 150,000 indirect and direct jobs in Uganda and thousands of opportunities for industry suppliers.

Production phase:

These include services like transport, hospitality, communications, banking, catering, waste management, IT services, construction, training and emergency services, advertising and public relations.

Robert Kasande, the assistant commissioner in the Petroleum Exploration and Production department (PEPD), who represented Energy Minister Irene Muloni at the function, confirmed that they were already looking at applications from Tullow for production licences over the eight fields.

He added that government would this week conclude discussions with Tullow and its partners regarding a commercialization plan for the discovered resources. The government plans to construct a crude oil export pipeline from Hoima through Kyoga basin-Karamoja to Turkana in the neighbouring Kenya and finally to Lamu at the coast.

The move creates the possibility that Uganda will produce and export both crude and refined products. Apart from the refinery at Kabaale in Hoima, the crude export pipeline is considered an option to deal with excess produce.

But to pull this off, the government needs Shs 456bn to construct two crude oil pipelines to evacuate crude from the oil fields to the refinery. The crude pipelines will be constantly heated to enable the crude oil to flow, since Uganda’s waxy crude solidifies at room temperature.

– The Observer

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