Tullow Sees Shs 31tn Uganda Oil MoU Signed “Soon”


medicine geneva;”>In an interim management statement, for the period of 1 January to 8 May 2013, in accordance with reporting requirements of the EU Transparency Directive, Tullow Chief Executive Aidan Heavey said Wednesday the plan involves a 30,000 barrels a day refinery and an export pipeline to carry crude oil from the Lake Albert Rift basin oil fields.

Tullow is working closely with partners Total SA (TOT) and China’s CNOOC Ltd. (CEO) to extract oil from western Uganda.

Heavey’s statement is issued in advance of the Group’s Annual General Meeting which is being held at the Haberdashers’ Hall in London.

“In Uganda, activities this year have focused on the remaining exploration and appraisal operations, field development planning and engagement with the Government of Uganda to agree a basin-wide development concept,” said Heavey.

“Exploration and appraisal activities across the basin this year have included two exploration wells, one appraisal well, seven flow tests and seismic acquisition. While resources continue to be enhanced through this exploratory appraisal, the Ondyek-1 well to the West of Nile was unsuccessful and exploration in this area is now complete,” he further noted.

The Tullow boss said “significant engagement” between the partners and the Government of Uganda has taken place recently and a common understanding has now been reached on the significant factors that impact the basin development.

“Critically, agreement has been reached on a basin commercialisation plan which will include an export pipeline and a refinery sized to meet the local market demand.

A Memorandum of Understanding, to document this agreement, is now being prepared and will form the basis of the integrated development work plan for the basin,” said Heavey, adding, “This is expected to include a number of Field Development Plans and Production Licence Applications that will be submitted during the course of the year.”

Museveni Intervenes

President Yoweri Museveni in April directed oil producing companies and the Ministry of Energy and Mineral Resources officials to finalize and agree on the development of the oil refinery and pipeline concurrently and sign a memorandum of Understanding to the start of oil production.

He noted that the negotiations on the MOU on building the refinery and pipe line have dragged on for a long time.

He said what the government wants is to produce enough oil to meet the demand in the market and to ensure that an oil pipe line operates at the optimal.

The two negotiating parties had disagreed on some of the clauses in the MOU of the development of the refinery and pipe line.

Museveni said oil production in Uganda is overdue and that a lot of time has been wasted in formulating the oil production documents like the Production Sharing Agreement and Memorandum of Understanding among others, between the Government of Uganda and the Oil Companies in the last seven years since oil in Uganda was found.

“We have wasted too much time. We are now with the issue of oil for seven years. We need to make our final decisions”, he said.

The President was speaking to a delegation from Total and China’s Cnooc Ltd in a meeting with the officials from the Ministry of Energy and Mineral Resources at State House in Entebbe.

The meeting was attended by the Minister for Energy and Mineral Development Eng. Irene Muloni while that of the oil companies was led by Loic Laurandel, general manager Total E&P Uganda.

The Oil Companies pressed on for the contraction of refinery size of 30,000 barrels of oil per day while the Ministry of Energy officials pressed for unconditional expansion of the refinery size of 30,000 to 60,000 barrels of oil per day when the demand increases in future.

The two parties however agreed to start with the refinery size of 30,000 barrels per day.

Museveni said that the government of Uganda needs the money from the oil to develop infrastructure and provide cheaper energy for the people to use for economic development. He said that Uganda government targets refinery size of 60,000 barrels per day because of the increasing demand in the market which is likely to over grow the present consumption rate of 30,000 barrels per day.

Loic Laurandel General Manager Total said that the agreement signed should be that which will attract refinery investors and the financiers of the project.

The meeting was also attended by Maria Kiwanuka Minister for Finance, the Attorney General Peter Nyombi and the Solicitor General.

Uganda spends at least sh2 trillion on the importation of petroleum products annually.

Lack of a refinery means Ugandans will have to pay an additional $17 per barrel of crude oil exported through the heated pipeline and miss the oil production by-products, petro-chemical industry and developing the technical capacity to manage the oil resources.


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