Africa Oil Week got off to a high profile start with a prestigious Ministerial and VIP Symposium on the in Cape Town, South Africa. Over 200 senior executives from International Oil Companies (IOCs) and National Oil Companies (NOCs) along with ministerial delegations from leading African nations joined to look for solutions to Africa’s energy challenges.
Amongst the traditional African oil giants were several countries that have been rapidly growing their oil and gas credentials in the form of Uganda and Equatorial Guinea.
Uganda joins the exporters club
The prospects for the hydrocarbon sector in Uganda are looking bright – Uganda will soon export its first crude oil from its Lake Albert oil discovery to the international market, making it one of the countries to have joined the oil exporting countries after the government came to an agreement with Tanzania that enables it to transport its crude oil through the East African Crude Oil Pipeline (EACOP), a 1,445-kilometre pipeline from Hoima, Uganda, to the port of Tanga in Tanzania is the proposed route.
“It is exciting times for Uganda, we are now preparing for production,” Hon Irene-Margaret Muloni, minister of energy and mineral development, Uganda, says. “It has taken us some time, but we are there. The exploration discovered six billion barrels and we have plans to recover about 1.4 billion of these. And now the issue is to get that out of the ground. We’ve already agreed with Tullow, Total and CNOOC the way forward to commercialise that oil.
“We need two big destinations. One is access to the international markets through the pipeline to add value and ensure security of supply within the East Africa region. Also, we are importers of petroleum products now, so we have a refinery under development.” That refinery is planned for Kabaale in Western Uganda’s Hoima district, along the eastern shore of Lake Albert, close to the border with the Democratic Republic of Congo. Once the refinery is completed, expected to be in 2022, it will produce kerosene, gasoline, diesel, heavy fuel oils for Uganda and other local markets. In addition to the refinery an airport, hospital and a 100-megawatt thermal power plant are being constructed.
“For these two big projects the pipeline is more advanced with the FEED signed and an intergovernmental agreement with Tanzania. We are now negotiating the host government agreements between us and setting up the private companies that are going to own and operate the pipeline. For the refinery we’ve already approved the configuration of the refinery that will handle 60,000 barrels per day. Those two projects are ongoing and as a country we are preparing the infrastructure.”
With the Lake Albert oil beginning to flow, Uganda has set its sights on further resources and in May announced a second licensing round for additional oil exploration in five blocks in western Uganda that will be announced before the end of 2019. “It is all about attracting companies to come and join us in the exploration. We have only licenced about 15% of the resources but the appetite is there because the parameters are world class. The success rate when you drill is hovering around 85%, meaning every time you drill a hole there is a good chance of success.”
More from Equatorial Guinea
Later this month Equatorial Guinea will announce the winning bids for its 27 oil and gas licences. The bidding round is reported to have attracted a high level of interest, especially among Chinese oil and gas companies following a roadshow in Beijing.
“We have many companies who have expressed an interest,” Hon Gabriel Mbaga Obiang Lima, Minister of mines, industry & energy, Equatorial Guinea says. We have pre-selected some of these because we see the most serious companies, but the important thing is that the key blocks have already attracted interest.”
Equatorial Guinea is already home to several majors including ExxonMobil. Kosmos, Marathon and Noble and hopes to attract several more in this latest round. “We are doing well, and we are delivering great revenue,” Gabriel Mbaga Obiang Lima adds. “But the issue here is what we are going to do in the future. Two of the fields are mature fields and we need to decide about them going forward. That revenue has allowed us to carry out investment in our infrastructure, but we are still keen on bringing in more companies.”
This year has been the Year of Energy 2019 in Equatorial Guinea, that saw several high-level investment conferences and roadshows in Malabo and internationally, and they are following that up next year with the Year of Investment 2020. “It has been very successful,” the minister explains. “A lot of people have heard more about what to do and we have been able to promote more content. We have also been able to prepare ourselves for the next year, 2020, which is going to be the investment year. We are looking to build refineries which will be the next stage of our development.”
Two of the challenges that often curtail investment in Africa are stringent local content rules and a regulatory framework that can be fluid. For Equatorial Guinea the subject of local content is not an issue according to Gabriel Mbaga Obiang Lima. “We have a limited population so local content have been mainly focused on a specialised sector such as the service industry,” he explains. “In general, I can say that more than 90% of the companies have done a very good job regarding local content that we’re happy with.”
As for the regulatory regime, Equatorial Guinea are going to be working next year on the new law. “We believe that our national companies will work more efficiently if, rather than having regular responsibility from a minister, it will be controlled by a law.”
Equatorial Guinea and Uganda were amongst almost forty ministerial delegations in attendance at the symposium. It was a fertile breeding ground for the movers and shakers of the industry and amidst the presentations, cocktails and networking, new deals and partnerships were being forged that could bear fruition over the coming months.