Oil, Gas Sector Opens Up Opportunities For Ugandans

Mr. Patrick Jean Pouyanne, Total Chairman with the President of Uganda H.E Yoweri Museveni and the President of the United Republic of Tanzania H.E Samia Suluhu Hassan after the signing of the key agreements.

Mr. Patrick Jean Pouyanne, Total Chairman with the President of Uganda H.E Yoweri Museveni and the President of the United Republic of Tanzania H.E Samia Suluhu Hassan after the signing of the key agreements.

The recent conclusion of key oil and gas agreements has opened up opportunities for the participation of Ugandans. Speaking at a press conference, Dr Kitutu Kimono Mary Goretti (MP), the Minister of Energy and Mineral Development (MEMD) highlighted specific areas that are now a reality for Ugandans who would like to work or provide goods and services to the industry.

“Ugandan companies will greatly benefit from the involvement of world-class oil service companies, expected Joint Venture Partnerships and sub-contracting opportunities,” she said. Dr. Kitutu added that Ugandan companies can expect to progressively gain capabilities to provide technical services that have hitherto been a preserve of the more experienced foreign companies.

Dr. Kitutu also noted that the conclusion of the key oil agreements has de-risked all the other upcoming projects including the refinery and the new exploration projects.

“The development of the Upstream projects guarantees the supply of feedstock into the refinery, while the pipeline and the refinery provide evacuation options for future oil discoveries in the new exploration areas,” she said.

The significant investment that has now been unlocked into Uganda’s economy includes the implementation of the Tilenga Project in Buliisa and Nwoya districts (approximately US$4 billion); the Kingfisher Project in Hoima and Kikuube Districts (approximately US$1.5 billion); and, the East African Crude Oil Pipeline (EACOP) (approx. US$3.6bn). This is in addition to what Government is already investing in the required support infrastructure, including Hoima International Airport (over US$500m) and 700 kilometres of oil roads (approx. US$900m).

“The project launch on Sunday, 11th April, 2021 at State House, is a demonstration of the commitment the respective Governments and oil companies have for the projects. With these agreements in place, the oil companies and Government will proceed with the approval and award of contracts to the main Engineering, Procurement and Construction (EPC) contractors” the Minister stressed.

Mr. Robert Kasande, the Permanent Secretary, MEMD, noted that the runway at the Hoima International Airport is almost ready.

“Any equipment needed in the short term will continue to come in by road. However, the airport has made significant progress and will be ready by the time delicate and/or voluminous equipment are required fast by the projects,” he said.

By the end of the construction phase, Uganda’s GDP will be significantly boosted through sectoral linkages by close to USD 9 Billion. This is a 22% increase of the current GDP, which is expected to reach USD 40.1 Billion in 2020/21.

Another key benefit from the oil and gas sector is the employment of Ugandans. About 14,000 people will be directly employed by the companies, while about 45,000 people will be indirectly employed by the contractors. An additional 105,000 people will benefit from induced employment based on the utilisation of other services by the oil and gas sector. Of the direct employment, 57% are expected to be Ugandans, which is expected to result in an estimated USD 48.5 million annual payment to Ugandan employees.

President Museveni and Mr. Pouyanne, Chairman Total, share a light moment during the signing ceremony.

Mr. Dozith Abeinomugisha, Director for Midstream, Petroleum Authority of Uganda (PAU) illustrated the labour needs of the industry with a description of the past industrial baseline survey.

“With maturity of projects over the years, the studies and designs have painted a clearer picture of the specific work requirements. This year, we shall carry out and complete a new industrial baseline survey that will shed more light on the labour needs,” he said.

Mr. Abeinomugisha also urged Ugandans who would like to work in, or supply goods and services to the sector, to register on the National Supplier Database (NSD) and the National Oil and Gas Talent Register (NOGTR).

“Globally, the countries that have done well in the oil and gas sector are those whose citizens have participated,” he noted.

On behalf of the investors in Uganda’s oil and gas sector, Mr. Pierre Jessua, the General Manager, Total E&P Uganda Limited, reiterated their commitment to promoting national content development in the implementation of the oil and gas projects, and fast-tracking the land acquisition processes, in line with international best practice.

“We are dedicated to ensuring that the projects are implemented while taking into consideration the environment and biodiversity stakes, as well as the local community rights, and within the stringent environment and social performance standards of the International Finance Cooperation ” he said. 

Achievements in National Content

Between 2017 and 2020, USD 52m out of the USD 147m spent by the licensed oil companies on procurement, was on local entities owned by Ugandans; this represents 35.75% of the total procurement spend by the IOCs.  In addition, 1,700 SMEs had their capacity built in the areas of health, safety and environment, bid management, financing, corporate governance, among others.

4,435 Ugandans have been trained in various technical disciplines to competitively participate in the oil and gas sector. Through the auspices of the PAU and the Ministry of Education and Sports, the Oil and Gas Trainers Association of Uganda (OGTAU) was formed to provide a platform to coordinate and advocate for skills development in the sector.

Uganda has witnessed several Government and Private training institutions acquire international accreditation to provide certified training programs.  These include the Uganda Petroleum Institute, Kigumba, Kiryadongo Technical Institute, Iganga Technical Institute, Nawanyago Technical Institute, Kibasa Technical Institute, Sun maker, Solid Rock, The Assessment and Skilling Center (TASC), Safe Way Right Way and SEAOWL, among others.

Key agreements concluded on Sunday, 11th April, 2021:

  1. The Uganda Host Government Agreement (HGA) between the Government of Uganda and the East African Crude Oil Pipeline (EACOP) Company – The HGA concluded the legal framework and contractual obligations between Uganda as the host country, and EACOP Co. as the project company Co.
  2. The Shareholders Agreement (SHA), which defines the rights and responsibilities of the shareholders in the EACOP Co. The shareholders are: the Uganda National Oil Company (UNOC) with 15%; the Joint Venture Partners (Total Holdings International B.V. with 62% and CNOOC Uganda Limited with 8%) and the Tanzania Petroleum Development Corporation (TPDC). TPDC will take shareholding of up to 15%; and,
  3. The Tariff and Transportation Agreement (TTA), which defines the rights and responsibilities of the shippers on the one hand, and the transporter on the other hand. The TTA was signed between the transporter, EACOP Co., and the Shippers of the crude oil who are the Government of Uganda, UNOC, Total E&P Uganda Limited and CNOOC Uganda Limited.

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