Uganda will have to wait until 2014 before it can begin drilling oil, this is according to Tullow oil’s Vice-President of African Business Tim O’Hanlon.
O’Hanlon who was speaking on a panel on Dec. 5 at an infrastructure conference in Kigali, called for transparency and predictability in the way governments deal with oil and gas developers. Production-sharing contracts kept secret from the public are usually a condition from the governments, not companies.
The company attributes this to delays in agreeing with Uganda on a plan to develop a refinery and export-pipeline. With this delay, the company projects it will be at least end of 2014 before crude starts flowing.
Tullow Oil is the company that discovered oil in Uganda in 2006.
Delays could last even longer while Tullow and its partners Total SA (FP) and CNOOC in the Lake Albert fields try to narrow differences with the state on a three-prong development plan, he said. Issues under discussion include financing arrangements and processing capacity for a planned refinery in Uganda and the terms of pipeline-construction to ship the crude to markets abroad, O’Hanlon added.
“Time is money, and the money will only flow when the oil is being sold, either through refinery gates or into a vessel off the coast and that’s taking longer than we hoped” in Uganda, he said in the interview. “But the private sector is always in a hurry and governments are often going slower than ideal because they are trying to get it spot-on right for their countries.”
This announcement comes at a time when Uganda’s parliament is locked in gridlock over the contentious clause 9 in the oil bill that is expected to be passed on Friday December 7th.
The UK-based Tullow, which has the most oil licenses in Africa of any company, announced early this year the first oil discovery in Kenya, along with its partner in the project, Africa Oil Corp. (AOI) They have yet to determine whether it’s commercially viable to develop the deposit.