Refining the Production Process

　　While much of Africa’s oil production is exportedin its crude form, Uganda is primed to build its own oilrefinery. This ambition is set to be realized after the ChinaNational Offshore Oil Corp. (CNOOC) struck a $2-billionlicensing deal to develop a vast petroleum field in Uganda.Signed in late September, it was the first oil productionlicense to be issued in Uganda.

　　Peter Lokeris, Uganda’s Assistant Energy Minister, saidin Kampala that the deal with CNOOC is a milestone thatwill allow the country to become self-sustaining in oiland gas production. Uganda is looking at both domesticand nearby East African markets for distribution of its oilproducts, the revenues of which could benefit millions ofits most impoverished citizens. As a landlocked country,Uganda currently imports all its oil products, with the majoritybrought in by costly road transport from Mombassain Kenya.

　　“We hope that CNOOC will quickly operationalize the40,000 barrel per day capacity of Kingfisher oil field,” Lokerissaid.

　　The Kingfisher oil field is located around Lake Albert inBunyoro, Hoima District, and was discovered by the Kingfisher-1 exploration well in 2006 by Heritage Oil and GasLtd. The Kingfisher Well is jointly owned by Total, Tullow andCNOOC, with CNOOC the main operator.

　　Further appraisals of the field led to other discoveriesof wells, now known as Kingfisher-1A, 1B, 2 and 3. The fieldis estimated to have combined oil deposits of 635 millionbarrels, 196 million barrels of which are recoverable.

　　To gain the license, CNOOC agreed to several stipulations,including producing oil in a sustainable and environmentallyfriendly manner. Lokeris said an environmentaland social impact assessment (ESIA) of the oil field’sdevelopment is underway.

　　A statement issued by Uganda’s Ministry of Energy saidthe long-term plan is to develop a refinery of 60,000 barrelsof oil per day (BOPD) starting with a 30,000-BOPD refinery,which will be in place by 2017/18. This date coincideswith the CNOOC’s expected oil production start from theKingfisher field.

　　Speaking about the new deal in parliament, PrimeMinister Amama Mbabazi said the government wants toplace the newfound oil wealth at the center of its strategictransformative agenda for the country. “We shall do that byworking with trustworthy and dependable people,” he said.Since granting the Kingfisher field license to CNOOC inearly October, the government has also invited tenders forthe construction of a $2.5-billion refinery, with the selectionof the refinery operator expected around April 2014.

　　The Ugandan Government has already procured 29 squarekm of land in Hoima, Western Uganda, 230 km from thecapital Kampala and in proximity of the oil field, to use as abase for the refinery project.

　　“We are committed to a transparent process to developUganda’s first oil refinery,” Fred Kabagambe-Kaliisa, thepermanent secretary in the Ministry of Energy and MineralDevelopment, told Uganda’s New Vision.

　　“This project marks the start of Uganda’s energy independenceand the refinery will enhance Uganda’s energysecurity by unleashing the opportunity of our country’s richoil resources, which some have described as the largestonshore oil discovery in Africa in the past 20 years,” Kabagambe-Kaliisa said.

　　Regional inclusion in the benefit from Uganda’s oilreserves is a focal point.

　　Robert Kasande, the team leader of the Uganda OilRefinery project, told Uganda’s New Times that four EastAfrican countries had been invited to invest in the refinery’spublic shares, which make up 40 percent of the company’sownership, set up as a private-public partnership. “We haveextended the invitation for the public stake to our regionalpartner states. They will have 10 percent,” he said.

　　Uganda’s oil discovery was first reported seven yearsago, but getting the oil out of the ground and into a refineryhas been a frustrating exercise in bureaucratic barriersand red tape.

　　The country’s oil reserve is estimated at 3.5 billionbarrels by its energy ministry, and the IMF reports Ugandahas Sub-Saharan Africa’s biggest oil reserves after Nigeria,Angola and South Sudan.