Uganda Strikes Oil Deal with Tullow and Partners

The Ugandan government has reportedly completed negotiations with a British company Tullow Oil and its partners and will soon sign an accord that could result in the commencement of crude oil production.

According to reports, an agreement between Tullow Oil, Total, China National offshore Production Company and Uganda, will see the African country construct an oil refinery, an export pipeline linking to Lamu in Kenya, as well as a power plant for the production of electricity.

The deal is said to be a follow up on a decision by Kenya’s President Uhuru Kenyatta and Uganda’s President Yoweri Museveni to have a mutual East African pipeline linking inland nations in the region to Lamu port. Reports also indicate that besides Uganda and Kenya, South Sudan is also expected to play a use this pipeline.

During a speech on Thursday, Uganda’s Energy Minister, Irene Muloni, stated that the Ugandan government would soon sign the memorandum of understanding (MoU) with Tullow and partners. The Minister further asserted that the deal is a momentous milestone because the market framework is paramount for the acquisition of funding.

According to Muloni, the development of the country’s oil fields and the construction of the necessary infrastructure would cost between $15 and $22 billion, although the government has plans to try to decrease that cost.

Reports also indicate that Uganda has been seeking investment partners for the construction of a 60,000 bpd oil refinery in the country’s western region. Sources also reveal that the government has shortlisted eight companies for the project.

During the same event, Tullow’s Company secretary and Executive Director, Graham Martin disclosed that oil production in Uganda is anticipated to average 220,000 barrels per day drawn from 1.7 billion barrels of recoverable reserves.

He further remarked that Uganda is among the countries at the center of the company’s production and exploration business strategy. It is reported that Uganda has the fourth-largest quantity of oil reserves in Africa behind South Sudan, Nigeria, and Angola.

Of the firms that negotiated the oil deal with Uganda, CNOOC has already obtained a production license, while Tullow Oil is still in the process of negotiating for one.

Tullow Oil is reported to have invested about $2.8 billion in Uganda and pundits anticipate th company will further invest between $15 and 22 billion.

According to reports, Tullow Oil expects to earn approximately $50 billion from the oil resource in Uganda.

Although the exact date of signing the agreement is unknown, the deal is deemed a major milestone for Uganda.

Meanwhile, pundits say East Africa has gained recognition as the next gas and oil production frontier with over four nations in the region reportedly announcing gas and oil discoveries.

Photo: Irene Muloni-Uganda’s Energy Minister