The Uganda Government and Oil Companies – Tullow, Total – have finally signed an Memorandum of Understanding (MOU).
The MOU was signed Wednesday night . The government has called for a press briefing later Thursday afternoon with further details of the MOU.
The MOU details plans for a refinery, an oil pipeline and power generation, which would move Uganda close to oil production. It also includes how much oil will be refined and exported among others.
The signing of the MOU has been dated as far back as February 2013 but Total, CNOOC, Tullow and government were yet to agree on the size of the oil refinery and the push for an oil pipeline by the oil companies.
In late October 2013, the government called for bids for interested parties to invest in an oil refinery. The government had been insistent on a refinery, something oil companies were opposed to, requesting for another option of having a crude oil pipeline. With the issuance of the first production license to CNOOC for the Kingfisher Field, talks appear to be yielding results with both parties offering concessions.
The delay in signing the MOU is said to have delayed oil production for discoveries made as far back as 2006. With reserves estimated at 3.5billion barrels, government wanted to have a refinery of 60,000 barrels per day, but is going to start with a capacity of 30,000 barrels per day.
On insisting on a refinery, the government wants to reduce on its importation of fuel estimated at 15percent of all imports at 400 million US dollars per year. The only missing detail however, is the size of the crude export oil pipeline. With the MOU is signed, this could give a clear signal on what the commercialization of Uganda’s oil will be.