Uganda plans to go-ahead with the construction of a mini-refinery for its two billion barrels of crude reserves after previously ruling the idea out, the state energy minister said.
Investor interest is heating up for Uganda’s oil discoveries since explorers Tullow Oil and Heritage Oil discovered hydrocarbons in the Lake Albert region bordering the Democratic Republic of Congo.
“We’re discovering fields almost every week. We have confirmed two billion barrels, but the other question is “Will the barrels get out of the ground?” so we’re going to build a mini-refinery,” said Simon D’Ujanga, state minister for energy.
“This region geologically has not been tested for flow of oil so we are programming a mini-refinery in order to produce some oil and see,” he said late on Thursday.
In February, D’Ujanga said that the mini-refinery idea was scrapped due to large finds in the region, and that Uganda wanted to build a larger refinery. He gave no other details on the mini-refinery.
Kampala expects to start pumping oil in 2010 or 2011.
Energy companies ” Tower Resources and Dominion Uganda Ltd, a subsidiary of Dominion Petroleum” are increasingly turning off the beaten track and searching east and central Africa for crude.
D’Ujanga said Uganda planned to increase the capacity of the Karuma hydropower dam project to 750 MW at a cost of $1.2-1.5 billion from a previous 200 MW scheme after the Norwegian firm Norpak pulled out late last year.
“This calls for more geological investigations,” he said. “We need to evaluate the environmental impact of problems that may be associated with it, so we are losing some time.”