No Ugandan Oil has been sold, UNOC

Uganda has not sold any single cup of oil from Albertine graben as it is being alleged, the government has clarified.

There have been speculations that oil is being smuggled out by some of the heavy trucks that have been seen moving in and out of oil wells at Tilenga and Kingfisher.

But instead the trucks going in and out of the area are either carrying equipment or fuel to facilitate oil production by 2025, according to Proscovia Nabbanja, the CEO of Uganda National Oil Company Limited (UNOC).

“We have not sold any oil. The trucks being talked about are there to deliver fuel to use in the oil production activities but not transporting oil from there,” Nabbanja explained.

The UNOC CEO made this clarification on Wednesday, 6^th March during an engagement with the media fraternity at State House Investors Protection Unit (SHIPU) head offices, Plot 51B, Lumumba Avenue, Nakasero, Kampala–Uganda.

The media engagement had been organized at the behest of SHIPU head, Col. Edith Nakalema to update the country on the status of Uganda’s biggest investment; the Oil and Gas Sector.

“Here at the State House Investors Protection Unit (SHIPU), our mandate is to promote, empower and protect investors—local and foreign. The Oil Sector is currently Uganda’s biggest investment; so we can’t ignore it. Today we are here with top executives from UNOC to update our friends in the media fraternity about what is going on in this sector for accurate information dissemination both in Uganda and abroad.

“I want to congratulate UNOC upon the investment strides in the National Oil and Gas Sectors. I want to reaffirm that SHIPU remains dedicated to enabling an inclusive investment climate for all,” Col. Nakalema explained and applauded.

She further called upon all communication officers from different Ministries, Departments, and Agencies to learn how to engage and communicate with members of the press/ journalists as far as information exchange is concerned.

The SHIPU head’s concern was buttressed by a section of journalists and NRM cadres.

“I want to thank Col.Nakalema for this [media] engagement initiative. This is the right direction. This should have been done a long time ago. Let people in charge [of Ministries, Departments, and Agencies] come out of those offices and sensitize the public. Ugandans have been having a different narrative about this Oil Project. I am happy that UNOC has come out to clarify. Let others also do the same,” stressed Lutaaya Muwanga, NRM publicity secretary, Wakiso District.

“The NRM government has achieved a lot in the last 38 years but no one is telling all these success stories to the public. Ugandans are not sensitized. I thank Col. Nakalema for this initiative [of media engagement]. My appeal to UNOC is to let this oil come out as soon as possible before President Museveni goes. We shall not allow him to retire before we realize the oil dream,” observed Justine Namakula, an NRM cadre.

Col.Nakalema pledged to lead this crusade to bridge the communication gap between different Ministries, Departments, and Agencies and the media fraternity.

SHIPU has also since created an online reporting portal ( protection.statehouseinvest.go.ug) where investors—local and foreign—can report their concerns and get solutions promptly.

WHAT UNOC HAS SOFAR DONE IN THE OIL & GAS PROJECTS

Uganda National Oil Company (UNOC) is a limited liability company solely owned by the Government of Uganda (GOU).

It was established under Section 42 of the Petroleum (Exploration, Development, and Production) Act and Section 7 of the Petroleum (Refining, Conversion, Transmission and Midstream Storage) Act, both of 2013.

It was incorporated under the Companies Act of 2012 as a limited liability company on June 12th, 2015.

UNOC has two shareholders-the Minister of Energy and Mineral Development (51%) and the Minister of Finance, Planning and Economic Development (49%).

UNOC has two subsidiaries namely the Uganda Refinery Holding Company (URHC) and the National Pipeline Company (NPC).

The overall mandate is to handle the Government of Uganda’s commercial interests in the petroleum sector and to ensure that the resource is exploited in a sustainable manner.

Others are ensuring national content (value retention) and expertise in oil and gas.

Uganda’s confirmed oil and gas resources are 6.5bn barrels of crude oil. Of this, 1.4bn- 1.7bn is recoverable.

Currently, only 40% of the Albertine Graben is licensed.

COMMERCIALISATION

The commercialisation plan for Uganda’s oil and gas resources is two-fold; a 60,000 barrels per day refinery and the East African Crude Oil Pipeline (EACOP), which will deliver crude oil to the international market.

UPSTREAM PROJECT (TILENGA AND KINGFISHER)

UNOC holds a 15% participating interest in Tilenga (Buliisa and Nwoya) and Kingfisher (Kikuube) projects on behalf of the State.

UNOC’s joint venture partners in the Upstream are TotalEnergies E&P Uganda (56.67%) and CNOOC Uganda Limited (28.33%).

As a non-operator, UNOC reviews and approves/recommends proposed work programmes and budgets. UNOC reviews bidder lists and recommends contract awards, hence ensuring value retention for Uganda (national content).

Ongoing is the drilling of wells in Tilenga (29 thus far) and Kingfisher (5) and establishment of other enabling infrastructure like central processing facilities ahead of production in 2025.

New ventures include Intent on ensuring reserves replacement. UNOC has thus successfully bid for the Kasuruban Contract Area, a 1,285sq kilometer oil and gas block in Buliisa, Hoima and Masindi districts. UNOC has also since signed a Production Sharing Agreement (PSA) with the MEMD to extensively explore and confirm viable oil and gas resources.

 

MIDSTREAM PROJECT (REFINERY)

According to Nabbanja, a 60,000 barrels/per day refinery to be in the Kabalega Industrial Park, Hoima, is one of UNOC’s key projects with a 40% shareholding held by the Uganda Refinery Holding Company.

UNOC recently signed an MOU with UAE-based Alpha MBM Investments LLC, now the lead partner. Negotiations are ongoing ahead of a final investment decision expected soon. A 211-kilometer multi-products pipeline will link the refinery to a 320 million litre Kampala Storage terminal in Namwabula, Mpigi District.

KABALEGA INDUSTRIAL PARK

The Kabalega Industrial Park (KIP) is among UNOC’s key midstream projects.

Located in Kabaale sub-county in Hoima, the KIP is a 25.97 square meter expansive land.

UNOC, through the Uganda Refinery Holding Company, leads its development, operationalization, and management. UNOC has a 51% shareholding.

It comprises of Uganda’s 2nd International Airport; Crude Oil Export Hub-beginning of the East African Crude Oil Pipeline (EACOP); Uganda Greenfield Refinery; Polymer and Fertilizer Industries; Light/medium Industry; Agro-Processors and Warehousing & Logistics.

Other land uses in the park will include commercial, retail, health, and residential spaces. UNOC is in discussions with South Africa-based COEGA Development Cooperation, a potential joint venture partner.

Most of the activities are progressing with emphasis on the provision of water, power, roads, and waste management among others.

BENEFITS TO UGANDANS

Preliminary economic modeling by UNOC of Kabalega Park, with its wide range of industries and commercial activities supported by the international Airport and the national road network, is expected to yield a wide range of economic benefits and they include.

Adding up to USD 4.9 bn per annum to National GDP.

Adding up to 11.9 bn per annum to the National Capital Formation.

Improving Uganda’s Balance of Payments by USD 849 million per annum.

Creating a fiscal impact of USD 1.2 bn per annum.

Creating 35,000 job opportunities.

 

EACOP

UNOC represents the Government of Uganda through the National Pipeline Company with a 15% shareholding.

Others are TotalEnergies 62%, TPDC 15% and CNOOC 8%. EACOP runs 1,443km from Kabaale, Hoima district in Uganda to the Chongoleani Peninsula near Tanga Port in Tanzania. It is a buried, thermally insulated 24″ pipeline along with six pumping stations (two in Uganda and four in Tanzania) ending at Tanga with a Terminal and Jetty. It will have a peak capacity of 246,000 barrels/day.

PROGRESS ON COMPENSATION

On the side of Uganda, there are 3,660 Project Affected Persons (PAPs). Of these, 3,482 (99%) have signed compensation agreements and 3,377(92%) have been paid.

On the side of Tanzania, there are 9,904 Project Affected Persons (PAPs). Of these, 9,823 (99%) have signed compensation agreements and 9,823(99%) have been paid.

“There is intention to compensate all PAPs before all projects commence and we believe to achieve all this within the time frame,” UNOC CEO assured.

According to UNOC, late last year, delivery of the first batch of 100-kilometer line pipes to Tanzania (TZ) commenced ahead of construction. Work on the coating plant in Nzega, (TZ) and the terminal in Tanga, is also ongoing. Construction in Uganda awaits completion of compensation.

DOWNSTREAM PROJECTS (JINJA & KAMPALA STORAGE TERMINALS)

UNOC solely operates the Jinja Storage Terminal (JST), a 30-million-liter refined petroleum products storage facility in Jinja. JST is a bonded storage facility that provides “hospitality” (storing fuel for oil marketing companies) to clients and keeps government strategic stock to ensure security of petroleum supplies.

UNOC is currently developing a fuel pipeline and an oil jetty to link the facility to water transport from Kisumu (Kenya) to facilitate oil imports via the lake.

The Kampala Storage (KST) is a petroleum products storage terminal under development in Namwabula, Mpigi.

It is expected to store about 320 million litres of fuel enough to last for about a month in case eventualities in the fuel supply chain. Uganda consumes about 6 million litres of fuel a day.

The terminal is planned to serve as a storage facility for both Government strategic reserves and providing “hospitality” (storing fuel for oil marketing companies).

The project designs are being progressed, the environmental social impact assessment (ESIA) was completed, and procurement of strategic partners is ongoing.

Once the refinery is complete in Hoima, a 211-kilometer multi-products pipeline will link the refinery to a 320 million litre Kampala Storage terminal in Namwabula, Mpigi District.

 

SOLE IMPORTATION OF PETROLEUM PRODUCTS

Following the enactment of the Petroleum Supply (amendment) Act, 2023, UNOC acquired sole importation status in December 2023.

Going forward, it will source petroleum products from the international market and supply the oil marketing companies (OMCs).

The move is meant to ensure security of supply, ultimately reversing the past trend of price hikes triggered by shortages. It also eliminates middlemen whose margins affect prices.

“UNOC is optimistic that an impasse involving a court case in Kenya will be resolved so that sole importation kicks off. Discussions are also ongoing with Tanzania as an alternative to Kenya,” Nabbanja clarified.

BENEFIT TO UGANDANS

Employment: 13,821 Ugandans have so far been employed in the oil and gas sector. The international oil companies (IOCs) employed 849 people of whom 71% (603) were Ugandans while contractors employed 12,074 of whom 95% (11,470) were Ugandans. The National Oil and Gas Talent Register (NOGTR) facilitates employment. By December 2023, 8,896 were registered. Of these 6973 (78%) were male while 1,922 (21%) were female.

Provision of goods and services: The law has been structured to give priority for the supply of goods and services to Ugandans and joint ventures involving Ugandan Companies.

All players in the sector are required to comply with this in their procurement of goods and services.

The cumulative value of contracts awarded since 2021, stands at US$7.163bn of which US$1.797bn has been awarded for Ugandan companies through direct tier one contracting and subcontracting from Tier One IOCs.

The National Supplier Database (NSD) facilitates acquisition of contracts. Since its creation in 2017, 12,542 applications have been received from companies.

Approximately, 73% of the companies involved in supplying the sector have been Ugandan companies (460/624).

Approximately US$ 988,658 has gone to the community economy through provision of goods and services.

Skills transfer/training: More than 5,000 Small and Medium Enterprises (SMEs) trained in key oil and gas business requirements).

Over 14,000 Ugandans have been trained and certified in various oil and gas disciplines of Welding, Health Safety and Environment, Heavy Goods Vehicle, and Scaffolding among others).

Infrastructure enhancement: for example the paved roads in the Albertine Graben and as well improved welfare through improved income, infrastructure, and services.

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