Uganda: Consultant Tips On Uganda's Oil
Building a refinery might be a complex undertaking given the nature of Uganda's oil, but it will save the country millions of dollars, according to a top oil and gas consultant.
"Uganda's refinery will be complex because of the nature of our oil. Our advantage, however, is that Uganda's oil has low sulphur content," Gerald Banaga-Baingi of HiL Consultants said. If Uganda's oil had high sulphur content, the country would have had to spend about $71m for a desulphurisation machine. Banaga-Baingi was speaking at a seminar organised to educate the different players in the oil and gas industry about the licensing, contracting and production sharing dynamics. The seminar, held at Kampala Serena hotel recently, was organised by the Uganda Chamber of Mines and Petroleum, an association of companies involved in Uganda's extractives sector. Taking participants through the basics of the oil industry, Banaga-Baingi said the other option of exporting crude would require either heating the pipeline at temperatures above 47 degrees Celsius or adding some additives to support the flow of the oil. "It all bears down to the cost. Somebody has to pay for the cost," he said.
The government, together with the oil companies, agreed to have both a midsize refinery and an export pipeline in place to develop the country's oil. Production is to start with a 30,000 barrels capacity refinery per day, before ramping it up to 60,000, while the companies will embark on an export pipeline that transports about 120,000 barrels of oil per day.
Banaga-Baingi noted that governments and companies have different objectives when they are going into the oil industry. He underscored the need to align "the interest of the state and the investor" for the sector to develop.
Richard Kaijuka, vice chairman of Uganda Chamber of Mines and Petroleum, cautioned the participants about the complexity of the sector, while Banaga-Baingi stressed that there is no room for errors. Uganda has so far discovered 3.5 billion barrels of proven reserves. Of this, up to 1.2 billion barrels are confirmed as recoverable.
Parliament has since last year been debating the relevant laws to govern oil production and development in the country.
By Moses Mugalu