Oil & gas

Uganda Moves Closer to Building $2.5bn Oil Refinery

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adiposity http://corpuschristimiami.com/wp-content/plugins/wp-e-commerce/wpsc-includes/wpsc-region.class.php geneva; line-height: 150%; font-size: small;”>Energy Minister Irene Muloni says government intends to have a refinery ready by 2017.

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She further told Chimpreports this week that by July, government will have identified the investor to take over the mantle to constructing the the $2.5bn refinery.


It should be remembered that in March this year a bidders’ conference was held in Kampala, Uganda.


The conference gave an opportunity to the prospective bidders to be briefed on the project and obtain clarifications regarding the Request for Proposal (RFP), visit the refinery project site being acquired by Government and some of the oil fields, and meet with the upstream oil companies to have a dialogue on crude supply arrangements for the refinery.


The Permanent Secretary of the Ministry of Energy and Mineral Development (MEMD), Kabagambe-Kaliisa, said the response to government’s RFP attests to the competitiveness of Uganda’s refinery project and the East African region’s business environment that provides an excellent investment destination.


“We expect that the bids submitted will be in line with Government of Uganda’s requirements for a credible, experienced and financially capable partner to work with Uganda to develop a refinery.”


The four shortlisted firms/consortia that have submitted proposals are led by the China Petroleum Pipeline Bureau (CPPB) from China.


CPPB together with its consortium members have executed major refining and/or pipeline projects in India, Chad, Kenya, Thailand, Mozambique and China, among others.


The second is Marubeni Corporation from Japan which has developed power projects, refineries, petrochemical plants, upstream assets and gas infrastructure in a number of countries, including the USA, UK, India, Qatar, Russia, and Kazakhstan.


The third is known as RT – Global Resources from Russia which is a state international (export) investment development company that finances large infrastructure projects. RT Global resources and its consortium members have developed key refining projects in Russia.


SK Group from South Korea which owns the second largest refinery in the world of 1.12 million barrels per day is also among the bidders.


PETROFAC from the UAE and VITOL SA from Switzerland did not submit proposals.


PETROFAC indicated they were opting to concentrate on their core business in Engineering, Procurement and Construction (EPC) for the Upstream petroleum sub-sector. VITOL SA cited internal reasons among the consortium members.


An evaluation team comprising of representatives from the Government of Uganda together with Government’s Transaction Advisor, TaylorDeJongh, will undertake a detailed evaluation of the proposals during June 2014.


The evaluation process is expected to take one month and after which, results will be announced. Negotiations are expected to be concluded by the fourth quarter of 2014.


“The evaluation Criteria will include, but not be limited to, the overall technical experience and financial capacity and the development, financial and commercial plans submitted by the bidders. One of the Government’s objectives is to select an investor that will develop a refinery to convert Uganda’s waxy crude oil into the desired petroleum products that meet set standards”, Mr. Robert Kasande, the Refinery Project Manager in MEMD added.

The technical evaluation will include, inter alia, an assessment of the Project Implementation Plan, relevant experience, operational plan, and local content strategy.

The bidders are also expected to detail their Health, Safety, Security and Environment protection strategy together with a Financial Plan, which should among other things, delineate the estimated capital costs of the project, how the investor will raise the required financing for the project, crude oil acquisition strategy and product sales plans.

Government is acquiring 29 Square kilometres of land in Buseruka Subcounty, Hoima District through implementation of a Resettlement Action Plan that provides for compensation and/or resettlement of Project Affected Persons (PAPs) in line with the existing national legislation and international best practices.

The results of the project tender will be announced in 2014.

Statistics indicate that since 1987, Uganda’s economy has been growing at twice the rate of Sub-Saharan Africa.

Uganda also appears ripe for investment and holds abundant energy resources?approximately 3.5 billion barrels of oil (of which 1.2-1.7 billion is commercially recoverable) and 350 billion cubic feet of gas in the Lake Albert region.

Once complete, the Project will serve as a gateway to East Africa, helping to deliver vital petroleum products to Ugandan citizens and neighbouring nations.


Huge project


The proposed Uganda Refinery Project will be constructed in Hoima, western Uganda, and is anticipated to have a capacity of 60,000 BPD.

Crude oil for the refinery will be procured from the fields under development by the Upstream Consortium comprised of CNOOC, Total SA and Tullow Oil.

The refinery will produce diesel, petrol, kerosene, jet fuel, liquefied petroleum gas (LPG) and heavy fuel oil (HFO).

Ugandan oil resources are a significant feedstock for a domestic refinery as this would be the nation’s first refinery.

There are approximately 3.5 billion barrels of oil (of which 1.2-1.7 billion is commercially recoverable) and 350 billion cubic feet of gas.

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