Uganda’s preparations to drill oil by 2020 has put it in the limelight, with the country landing an invite to attend the forthcoming OPEC meeting in Russia as an observer, the Energy minister Irene Muloni has said.
“We’ve received an invitation from OPEC to attend their meetings as observers. This is going to be the longest heated pipeline in the world,” Ms. Muloni said in Kampala at an oil and mineral stakeholders meeting.
Two weeks from now, countries that produce more than half the world’s oil gather in Vienna, Austria to discuss extending the production cuts that helped lift prices to two-year highs.
According to the sources, preparations for the Nov 30, 2017 meeting in the Austrian capital begin one week earlier, with a workshop to discuss the outlook for shale oil followed by the meeting of the Organization of Petroleum Exporting Countries’ Economic Commission (OPEC) Board. This panel of representatives from member countries, which discusses the market before every ministerial meeting, will focus on forecasts for demand this winter, including consideration of the International Energy Agency’s estimate for weaker-than-expected fuel consumption, another delegate said.
The invitation to Uganda to attend the OPEC meeting comes at the time when the country is in critical stages of building a refinery as well as an oil export pipeline to the Tanzania Indian Sea Port of Tanga. Uganda is estimated to have proven crude oil reserves of 6.5 billion barrels, about 2.2 billion of which is recoverable. The refinery is expected to produce 60,000 barrels of oil per day.
At the meeting, apart from playing the observer role, Ugandan delegates are expected to court other oil investors interested in taking part in its oil sub sector.
In August 2017, a new consortium led by General Electric of the United States and JK Minerals South Africa agreed to build the US$4 billion refinery and to own 50 percent and JK Minerals Africa to own 10 percent, while the government of Uganda and other investors take up the remaining 40 percent.
Other members in this new consortium are; Yaatra Ventures LLC, Intracontinent Asset Holdings and Saipem SpA of Italy. “The firms were competitors during the initial bidding. However, the came together and formed a special purpose vehicle, the Albertine Graben Refinery Consortium (AGRC), which is expected to design, procure the necessary supplies and build the refinery,” a source says.
A report says that the government of Uganda has proposed that the remaining 40.0 percent be divided among itself, Burundi, Kenya, Rwanda, and Tanzania in equal shares except that Uganda would assume whatever ownership interests are not subscribed by the other countries.
Kenya has agreed to purchase a 2.5 percent interest in the refinery for an estimated KES5.6 billion. It has not decided whether to increase that interest to the maximum of 8.0 percent, saying that it needs to further evaluate the project’s commercial value in light of the government’s budgetary constraints.
Burundi and Rwanda have submitted letters of interest to Uganda, but the former has not decided the extent of its ownership interest, waiting on the feasibility study of the refinery and a detailed statement of anticipated costs.
Tanzania has committed to pay US$150.4 million for 8 percent ownership in the refinery.
