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Optimism as govt, investors sign refinery deal

Tullow Oil plant in Uganda.

In August 2017, Government of Uganda selected the Albertine Graben Refinery Consortium to negotiate the Project Framework Agreement (PFA) for the development of the oil refinery. The plan for the development of the refinery is in line with the Uganda National Oil and Gas Policy (2008), which provides for value addition and development of necessary infrastructure in the oil and gas sector.

This new development comes at a time when joint venture partners in Uganda’s oil sector, Total E&P Uganda, Tullow Oil Uganda and CNOOC Uganda Ltd are frantically working to ensure that they hit the government’s target of producing first oil by the end of 2020.

But, the lack of an investor in Uganda’s refinery has been a bottle neck for the government, Don Bwesigye Binyina, the Executive Director, African Centre for Energy and Mineral Development (ACEMP) told The Independent on April 16.

“The FEEDs for the crude export pipeline and the CPFs are in conclusion and now the signing of the refinery contract takes the country into the actual commercialization of Uganda’s oil,” he said, “That was a significant step in Uganda’s long winding journey,” Binyina said of the agreement between the government and the refinery investors.

Binyina said there are signs that the global oil market is recovering and anybody investing in the refinery would be making the right decision.

Still, some experts in the sector have continued to express skepticism about the government’s timeline of producing first oil in 2020.

Robert Kasande, the Permanent Secretary in Uganda’s Energy Ministry told The Independent on April 16 that the year 2020 is when the country will start to produce oil and that oil can either go into a refinery or a crude oil export pipeline.

“So whether the refinery is delivered in 2020 or not does not matter,” he said. Kasande was responding to the question of whether the refinery can be ready in less than three years considering that the government has always insisted that the refinery would have the first call for Uganda’s oil.

“As long as there is an outlet and the upstream oil companies are ready to produce, the 2020 timeline will be met,” Kasande told The Independent. “If it (refinery) is ready, it will be the first priority but if it is not, it does not mean that we won’t produce oil.”

He added: “We expect that the consortium will be undertaking studies that get us to understand the commercial viability of the refinery.”

“Those studies, Kasande said, will last at least 18 months and, include a refinery configuration, logistics study on how the investors will get the bulky equipment in the interior of Uganda and market study for the products an environmental social impact assessment as well as a FEED study for the refinery.

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