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  • Tilenga Project: Government to conduct public oil hearings

    Government has accepted to hold two public hearings over the Environmental and Social Impact Assessment (ESIA) report for the Tilenga oil project.

    The public is hereby notified that the Petroleum Authority of Uganda (PAU) has been requested by the National Environment Management Authority (NEMA) to hold public hearings for the Environmental and Social impact Assessment report for the proposed Tilenga project, a statement released by PAU last evening reads in part.

    The name Tilenga is derived from two local names for the Uganda Kob (Antelope) which is called “Til” in Acholi and “Engabi” in Runyoro-Rutoro.

    NEMA received the ESIA from Total E&P Uganda and Tullow Uganda operations Pty Ltd for the proposed Tilenga project.

    Under the Tilenga project, the Government through its licensed oil companies has discovered commercially viable oil deposits north of Victoria Nile in Murchison falls national park and south of Victoria Nile in Buliisa district.

    The project includes jobi-Rii, Gunya, Ngiri, Kasemene, wahrindi, Nsoga, Kigogole oil fields. In 2016, Government granted petroleum production licenses to Total Exploration and Production Uganda B.V (TEPU) and Tullow Uganda operations Pty Ltd (TUOP) to develop and operate upstream petroleum facilities in the Albertine graben. Oil Licenses

    TEPU was granted production licenses for Ngiri, Jobi-Rii, Gunya fields while TUOP was granted production licenses in Mputa,Nzizi,Waraga, Kasemene, Wahrindi, Kigogole-Ngara,Nsoga and Ngege fields.

    The development of six fields namely Ngiri, Jobi-Rii, Gunya, Kigogole and Kasemene-Wahrindi within Buliisa and Nwoya districts will form part of the Tilenga project.

    The Tilenga project will be funded by TEPU, TUOP, CNOOC Uganda Ltd and Uganda National Oil Company.

    Composition According to the project documents which oil in Uganda has seen, the Tilenga project is composed of well pads, a central processing facility and other associated facilities, production and injection network of pipelines and cables, Bugungu airstrip, Tangi operation camp, a water abstraction system, victoria Nile crossing, river Nile pipe crossing and some roads.

    The project also includes temporary construction camps, construction support base, a logistical check point in Masindi and borrow pits. NEMA’s notice

    Oil in Uganda reported this week how the National Environment Management Authority (NEMA) is seeking public comments on ESIA for the Tilenga project.

    A public hearing will be a forum in which relevant stakeholders and developers will be brought together to express opinions and offer suggestions on the proposed project to influence the decision making process during the ESIA approval.

    The hearings will be held in accordance with regulation 22 of the National Environment impact Assessment regulations 1998, the statement added.

    A public notice released by the NEMA Executive director Dr Tom Okurut informed the public that the outcomes of the public review will contribute towards making a final decision of the project in accordance with the Environment impact assessment regulations.

    The notice asked members of the public to submit their comments by November 9th 2018.

    Concern of CSOs However, 13 CSOs demanded for public hearings over the project.

    “It is through public hearings that oil host and affected communities, the poor, marginalised and illiterate will be able to make comments on the ESIA to enable NEMA make a decision based on the collective input of all concerned stakeholders” the CSOs said in a joint letter to the NEMA executive Director Dr Tom Okurut.

    The CSOs said they are concerned that in the notice, NEMA did not indicate that it will call for public hearings before making any decision on the ESIA.

    The concerns of the CSOs are contained in a letter dated October 17, 2018 which was submitted to NEMA by the AFIEGO Chief Executive Director Dickens Kamugisha on behalf of the CSOs.

    The Environmental Impact Assessment (EIA) Regulations of 1998 mandate NEMA to call for a public hearing where there is controversy or where a project has trans boundary impacts, the CSOs argued.

    “We need public hearings to ensure effective public consultations that can build consensus not only among Ugandan stakeholders but also stakeholders across the borders who are likely to be affected by the Tilenga project” said Kamugisha, a lawyer. Hearings

    Gloria Ssebikari, a senior communication officer at the the Petroleum Authority of Uganda (PAU), PAU will conduct two public hearings this month.

    “The public is further notified that there will be two public hearings held on 12th November 2018 at Buliisa district headquarters and on 15th November 2018 at Gotapwoyo primary school, Gptapwoyo subcounty, Nwoya district from 9am to 5 pm” the notice reads in part.

    The notice indicated that public comments should be addressed to the presiding officer at PAU.

    Local communities fear that oil developments in an ecologically fragile area in Murchison falls national park and around the Nile delta could potentially affect the environment. The national park is one of Uganda’s leading tourism destinations and it hosts thousands of wild endangered species of animals, birds, insects and reptiles.

    River Nile waters are shared by Uganda, Rwanda, Sudan, Tanzania, Burundi, South Sudan, Ethiopia, Kenya, Egypt and DRC.

    The CSOs have asked government to establish a multi-stakeholder committee comprised of actors from government, the private sector, religious and cultural groups, CSOs, the academia and others to act as an independent multidisciplinary oversight body to promote compliance with environmental conservation tools such as EIA, SEA, ESIA.

    The CSOs have further asked NEMA to delay any decision to issue a certificate of approval for the Tilenga ESIA until the new environmental laws and regulations are put in place by government and parliament. This will help the country to stop engaging in oil activities based on a weak and outdated environmental legal framework, the petition added.

    The CSOS that petitioned include the Africa institute for Energy Governance (AFIEGO), National Association of Professional Environmentalists (NAPE), Environmental Conservation Trust of Uganda (ECOTRUST), Guild Presidents Forum on Oil Governance (GPFOG), Center for Constitutional Governance (CCG), South Western Center for Policy and Advocacy (SOWIPA), World Voices Uganda (WVU), Community Transformation Foundation Network (COTFONE), Greater, Green Organisation Africa (GOA)-Masindi, Oil Refinery Residents Association (ORRA)-Hoima, Kakindo Orphans Care-Buliisa, Girl Power foundation-Kasese, Friends of Nature-Kasese.

    Fears of Environmental damage

    The study released by the worldwide fund for nature (WWF) and the civil society Coalition on oil and gas (CSCO) titled “Safeguarding People & nature in the East African Crude Oil (EACOP) Pipeline,” expresses fears of a possible pollution of fresh water pollution in the Lake Victoria basin.

    According to a study, the East African crude oil pipeline will cross Kagera River, the largest river flowing into Lake Victoria.

    “The probability of leakage and spillage within the Lake Victoria watershed area is even greater given it is an active seismic area” the report stated.

    The report was released in July 2017 as a preliminary Threat Analysis (PTA) of the East Africa Crude Oil Pipeline (EACOP).

    The Crude oil covering 1,445 km will transport crude oil from Hoima district in Western Uganda to Tanga port in Tanzania.

    The Pipeline project was commissioned by President Museveni And his Tanzanian counterpart John Pombe Magufuli in November 2017,.

    By Oil in Uganda correspondent, Bunyoro

  • NEMA reviews environmental concerns over Tilenga project

    The National Environment Management Authority (NEMA) is seeking public comments on the Environmental and Social Impact Assessment (ESIA) report for the Tilenga oil project.

    The name Tilenga is derived from two local names for the Uganda Kob (Antelope) which is called “Til” in Acholi and “Engabi” in Runyoro-Rotoro.

    A notice which has been pinned on public notice boards in Buliisa district indicates that NEMA received the ESIA from Total E&P Uganda and Tullow Uganda operations Pty Ltd for the proposed Tilenga project.

    Under the Tilenga project, the Government through its licensed oil companies has discovered commercially viable oil deposits north of Victoria Nile in Murchison falls national park and south of Victoria Nile in Buliisa district.

    The project includes jobi-Rii, Gunya, Ngiri, Kasemene, wahrindi, Nsoga, Kigogole oil fields. Composition According to the project documents which oil in Uganda has seen, the Tilenga project is composed of well pads, a central processing facility and other associated facilities, production and injection network of pipelines and cables, Bugungu airstrip, Tangi operation camp, a water abstraction system, victoria Nile crossing, river Nile pipe crossing and some roads.

    The project also includes temporary construction camps, construction support base, a logistical check point in Masindi and borrow pits.

    “The public is further notified that the outcomes of the public review will contribute towards making a final decision of the project in accordance with the Environment impact assessment regulations” a notice released by the NEMA Executive director Dr Tom Okurut reads in part.

    According to the notice, members of the public have been asked to submit their comments by November 9th 2018. CSO Petition 13 civil society organisations have asked NEMA to hold public hearings to enable locals have an input in the studies.

    “It is through public hearings that oil host and affected communities, the poor, marginalised and illiterate will be able to make comments on the ESIA to enable NEMA make a decision based on the collective input of all concerned stakeholders” the CSOs said in a joint letter to the NEMA executive Director.

    According to the CSOs which are working to prevent the impacts of oil on biodiversity from Buliisa, Hoima, Kasese, Greater Masaka, South Western Uganda and Kampala, they are concerned that in the notice, NEMA did not indicate that it will call for public hearings before making any decision on the ESIA.

    The concerns of the CSOs are contained in a letter dated October 17, 2018 which was submitted to NEMA by the AFIEGO Chief Executive Director on behalf of the CSOs.

    The Environmental Impact Assessment (EIA) Regulations of 1998 mandate NEMA to call for a public hearing where there is controversy or where a project has trans boundary impacts, the CSOs argued.

    “The Tilenga oil project is controversial and will have trans boundary impacts. The project’s activities will include drawing of water from Lake Albert, whose boundaries remain a challenge between Uganda and the Democratic Republic of Congo (DRC). It should be noted that even the existence of many agreements including the Uganda Zaire 1990 Agreement, the 2007 Uganda-DRC Ngurdoto Agreement and others whose main objective was to address the peace and security challenges in the Uganda-DRC border areas through among other things providing for a framework for benefit sharing and conservation of shared resources such as the Lake Albert waters, fish and others have failed to achieve lasting results” Dickens Kamugisha, the Chief Executive officer of the Africa institute for Energy Governance(AFIEGO).

    The CSOs warned that if the Tilenga project is not well handled, it may worsen the conflicts and loss of lives as well as environmental destruction in Uganda and the DRC.

    “We need public hearings to ensure effective public consultations that can build consensus not only among Ugandan stakeholders but also stakeholders across the borders who are likely to be affected by the Tilenga project” said Kamugisha, a lawyer.

    The CSO stated that available evidence indicates that NEMA has the skills and interest to do a good job but it cannot effectively play its role amidst weak and outdated laws.

    It is unfortunate that for over four years, government and parliament have failed or ignored the need to complete the enactment and formulation of the new environmental laws such as the National Environment Bill of 2017, the draft EIA and Strategic Environment Assessment (SEA) regulations of 2017, the Uganda Wildlife Bill and others. Without such relevant laws to among other things improve NEMA’s independence, funding, penalties for environmental offenders, the CSOS stated in their five-paged petition to NEMA.

    It is especially unfortunate that todate, as government and oil companies are finalising major oil decisions that will have long lasting environmental and social impacts, there is no specific provision in our current laws including the 1995 National Environment Act, the Uganda Wildlife Act and others that specifically provides for NEMA to reject oil activities even in the most critical biodiversity areas such as Lake Albert, River Nile, Budongo Forest, Murchison Falls National Park, and others of national and international importance, the petition which was received and stamped by NEMA on 18th October reads in part. Demands

    “NEMA should use its powers not to issue any certificate of approval for oil projects as a condition to force parliament and government to complete the new environmental laws and regulations” the petition stated.

    The CSOs have asked government to establish a multi-stakeholder committee comprised of actors from government, the private sector, religious and cultural groups, CSOs, the academia and others to act as an independent multidisciplinary oversight body to promote compliance with environmental conservation tools such as EIA, SEA, ESIA.

    The CSOs have further asked NEMA to delay any decision to issue a certificate of approval for the Tilenga ESIA until the new environmental laws and regulations are put in place by government and parliament. This will help the country to stop engaging in oil activities based on a weak and outdated environmental legal framework, the petition added.

    The CSOS that petitioned include the Africa institute for Energy Governance (AFIEGO), National Association of Professional Environmentalists (NAPE), Environmental Conservation Trust of Uganda (ECOTRUST), Guild Presidents Forum on Oil Governance (GPFOG), Center for Constitutional Governance (CCG), South Western Center for Policy and Advocacy (SOWIPA), World Voices Uganda (WVU), Community Transformation Foundation Network (COTFONE), Greater, Green Organisation Africa (GOA)-Masindi, Oil Refinery Residents Association (ORRA)-Hoima, Kakindo Orphans Care-Buliisa, Girl Power foundation-Kasese, Friends of Nature-Kasese.

    By Oil in Uganda correspondent, Bunyoro

  • Panyimur, Nwoya residents’ tales of oil discovery impacts

     

  • UNOC, CNOOC to begin joint oil exploration in 2019

    Uganda National Oil Company Ltd signed a Memorandum of Understanding (MoU) with China National Offshore Oil Company (CNOOC) to work together to start a partnership in exploration in the Albertine Graben.

    The MoU was signed by Dr. Josephine Wapakabulo, the Chief Executive Officer (CEO) UNOC and Fang Zhi, the Chairman of CNOOC International today in Beijing and was witnessed by HE President Yoweri Kaguta Museveni, Hon. Sam Kuteesa, Minister of Foreign Affairs and Mr. William Byaruhanga the Attorney General.

    The MoU indicates that UNOC and CNOOC will work together to develop a block in the Albertine Graben and the two entities intend to start the process of accessing the identified block as soon as possible.

    The purpose of this cooperation is to ensure that more crude oil is discovered to support the projected production profile of already discovered resources that are under development as well as create an avenue for UNOC to grow its exploration capabilities and begin its journey towards a fully-fledged oil company able to perform operatorship roles.

    It is the intention of the two companies to start the process of applying for the identified block in October and start exploration activities as soon as the Ministry of Energy and Mineral Development (MEMD) grants them a license.

    It is hoped that the licensing process will not take long and it is planned that the planned activities should start early next year. “UNOC and CNOOC plan to grow their partnership into other operations in and outside of Uganda. UNOC will rely heavily on CNOOC’s experience as a national oil company to grow its capabilities and expertise,” the statement reads in part.

    President Yoweri Kaguta Museveni was pleased with the step UNOC and CNOOC were taking in furthering exploration in the Albertine Graben. Dr Josephine Wapakabulo indicated that UNOC is happy to continue building on a very firm and longstanding relationship between the People’s Republic of China and the Republic of Uganda.

    She confirmed UNOC’s commitment to ensuring sustainable as well commercial exploitation of Uganda’s Crude oil and gas sector. CNOOC, confirmed their continued commitment to Uganda and working with UNOC to ensure national participation as well as supporting UNOC on its journey to operatorship.

    The MoU will be followed by further commercial agreements and it is hoped that these and all relevant approvals will be concluded before end of this year so exploration starts in 2019.

    Edward Ssekika

  • Uganda Petroleum Institute to get University status

     

    One stone at a time: the first, laid by President Museveni, paves the way for great aspirations

    Government is in final stages of upgrading Uganda Petroleum Institute Kigumba (UPIK) to a University status.

    The revelation was made by the Prime Minister of Uganda Dr Ruhakana Rugunda while representing President Museveni at the 24th coronation anniversary celebrations of the Omukama of Bunyoro Kitara.

    Skilling challenges

    Earlier, the Bunyoro Kitara Kingdom Prime Minister Andrew Byakutaga had told the gathering that President Museveni had in April met with the Omukama of Bunyoro at state house in Kampala to deliberate on various development programmes.

    He reported that among others, the President agreed that a public university will become operational at Uganda Petroleum Institute Kigumba (UPIK).

    Uganda’s Prime Minister who represented President Museveni at the celebrations reaffirmed the President’s promise.

    “As Government, we have approved the operationalization of Bunyoro University at Kigumba. Since we have here the minister of Finance, he should expedite a release of the funds when the matter reaches his desk” Rugunda said.

    UPIK

    The Uganda Petroleum Institute Kigumba (UPIK) is a Government Tertiary institution that offers petroleum studies.

    The institute is located in Kigumba town council in Kiryandongo district.It offers a two year diploma course in petroleum engineering.

    According to the UPIK Academic registrar James Bagaya, priority consideration is being given to students who passed science at the Uganda Advanced certificate of Education (UACE). They should have done mathematics, physics, chemistry and technical drawing.

    The students must have sat A Level not more than two years ago or having a national certificate in electrical, mechanical or any other Engineering course.

    He says the students who have a national certificate from a recognized technical institute will be considered under a certificate entry scheme.

    The students should have at least ten points, Bagaya says.

    He said the institute recruits 35 students every academic year. The institute has repeatedly received a barrage of criticism of producing graduates that are not employed in Uganda’s mainstream oil and gas industry.

    Projects

    Uganda’s Finance Minister Matia Kasaija who hails from Bunyoro region and represents Buyanja County in the 10th parliament asked the Kingdom to bring to him proposals for development projects.

    “I have repeatedly asked the Kingdom to bring those proposals to me. Bring them and leave me with a duty to look for funding” he said.

    Preparations

    Uganda has over 6.5 billion barrels of crude oil. The Government’s target is to kick off commercial oil production by 2020.

    Under the Public finance Act, Cultural institutions   are entitled to a 1% share of oil royalties.

    Since last year, the Omukama of Bunyoro Kitara Kingdom has been reorganizing his Kingdom. He instituted a seven-man Royal commission headed by Dr Kabagambe Kaliisa, a retired permanent secretary in the Ministry of Energy, and is currently a Presidential advisor on oil and gas.

    The commission which he heads, does oversight on all Kingdom activities and it advises the Omukama who heads all clans in Bunyoro.

    The discussion on how Bunyoro region can tap in the petroleum industry took centre stage as the Kingdom commemorated the Omukama’s 24th coronation anniversary celebrations.

    The oil-rich Kingdom celebrated 24years since Omukama Dr Solomon Gafabusa Iguru 1 ascended to the throne. The Kingdom covers the districts of Hoima, Kibaale, Kagadi, Kakumiro, Buliisa, Kiryandongo and Masindi.

    By Hoima Correspondent

    Oil.Uganda@actionaid.org

     

     

  • Government to dispose-off crude oil

    The Ugandan government plans to dispose-off crude oil stock that was accumulated during the oil exploration and appraisal phase.

    Over 45,211 barrels of oil were reportedly accumulated during the extended well testing in the Albertine graben in Mid-Western Uganda.

    Extended well tests (EWTs) are used to undertake further evaluation of the productivity and characteristics of reservoirs.

    The tests help oil engineers and technicians in understanding the potential of reservoirs to enable better planning and definition of appropriate field development philosophies and production technologies. The exercise thus helps development engineers and production technicians to pilot future facility designs during actual oil field development and eventual production. Extended well testing also helps to obtain additional production-related data, such as water cut, sand production, and well deliverability.

    The oil that was collected during the extended well testing is currently stored in bitutainers at oil well sites of Kasemene 1, Ngara 1 and Ngiri 2, all in Buliisa district. More oil is stored at Tangi Camp area in Nwoya district, Acholi sub-region.

    Some locals in the oil-rich Bunyoro region have been suspicious about oil tankers that have been moving in and out of the Albertine graben. There has been speculation that the tankers could be siphoning oil out of the oil fields. Government and oil firms have repeatedly denied the accusations.

    “Those speculations have been common and Government needs to come out clearly and transparently to explain what those tankers transport,” said Biira Nasser Kiwanuka, the Executive Director of Midwestern region Anti- corruption Coalition (MIRAC), a Bunyoro regional anti- corruption agency.

    Oil in Uganda has learnt that Uganda National Oil Company (UNOC) Ltd is sourcing for companies that can purchase the 45,211 barrels of test crude in the Albertine graben.

    UNOC’s overall function is to handle the State’s commercial interests in the oil and gas sub-sector and ensure that the resource is exploited in a sustainable manner in order enable realization of benefits for the current and future generations.

    UNOC, as per the Petroleum (Exploration, Development and Production) Act and the Petroleum (Refining, Conversion, Transmission and Midstream) Act, both of 2013, is mandated to operate across the petroleum value chain (upstream, midstream and downstream).

    Purchase for test oil up for grabs

    The application process for interested firms in the purchase of the test crude oil is on-going and the deadline is July 10th this year, Oil in Uganda has learnt.

    The applications are being submitted to the office of the UNOC Head of Procurement and logistics which is located at Amber house in Kampala.

    The companies are required to present a crude oil stabilization plan including technology that will be used.

    According to a procurement notice reference number UNOC/Disposal/17-18/001, the companies interested in purchasing the crude should make formal applications to UNOC.

    -“Buyers must demonstrate the provision of suitably insulated and certified containers for transportation of heated test crude oil”, the notice reads in part.

    -The buyers are required to provide the oil spill response plans and all vehicles being fitted with -kits and attachment of contractor personnel who will be trained on how to use them.

    The buyers must have off-loading and feed pumps plus heaters.

    -The buyer must demonstrate Quality, Health, Safety, and Environment (QHSE) management system, procedure/plans for journey management, incident management and spill response, the notice further reads.

    The UNOC Communication Officer, Ms. Angella Kariisa said test crude was initially meant to be burnt through flaring during the well-testing activities.

    “Government decided that is was not good for the environment so the practice of flaring was stopped. We therefore thought it would be in the country’s best interest to sell it and make some money off it”, she said.

    Asked how much money UNOC anticipates to earn from the test crude, Kariisa was non-committal.

    “We are working to get the best price possible”, she said.

    The Buliisa County Member of Parliament, Hon. Stephen Birahwa Mukitale welcomed the disposal of the crude oil.

    “It allays fears and suspicions from people who have been alleging that the oil was already being sold off,” said Hon. Mukitale, whose home is in Kisansya cell, Buliisa Town Council, where Kasemene oil field is located.

    Asked about the feeling of the locals about the sale of the crude, Mukitale said the people he represents do not have any issues with it.

    “It is procedurally right for government to dispose-off public assets that they are not using. That crude was used for study purposes. The purpose has been achieved”, he said.

    He however suggested that such crude could have been used by Ugandan industries as heavy fuel for running heavy duty power generators. He added that the major focus of his constituents who host more than 28 oil wells is the next phase of development and production. They are interested in being aligned with the developments so as to gain more benefits overall.

    By Oil in Uganda Correspondent

    Oil.Uganda@actionaid.org

     

  • Youth urge government to train them for the oil sector instead of sidelining them

    Communique by GPFOG calling on government to improve national content efforts

  • East African Crude Oil Pipeline: The Inside Story

    East African Crude Oil Pipeline: The Inside Story Details emerge of how the crude oil pipeline will be financed, managed

     New details have emerged in the East African Crude Oil Pipeline (EACOP) regarding how it will be financed, run and managed. For starters, Uganda plans to construct a pipeline that will transport its crude oil to the international market through the Tanzanian coastal port of Tanga.

    The pipeline, is expected to be completed by the year 2020, when the country is scheduled to start oil production. In fact, Uganda’s President, Yoweri Museveni and his Tanzanian counterpart recently commissioned the construction of the East African Crude Oil Pipeline. The two leaders laid mark stones for the crude oil pipeline in Mutukula, Kyotera district and Kabaale in Hoima district. Total E&P Uganda, a subsidiary of French oil giant, Total S.A, is spearheading the construction of the crude oil pipeline on behalf of the joint venture partners. Adewale Fayemi, the general manager, Total E&P Uganda says discussions are ongoing to discuss on the formalities of how the pipeline will be run.  Already, an agreement has been reached that the East African Crude Oil Pipeline (EACOP) will be run and managed by a Special Purpose Vehicle (SPV) – private pipeline company. This means that a private company will be incorporated with joint venture partners – Tullow Uganda, Cnooc Uganda Ltd and Total E&P Uganda, and the governments of Uganda and Tanzania as shareholders in the company.

    Uganda’s minister of Energy and Mineral Development, Irene Muloni, says that the National Pipeline Company (U) Ltd – a subsidiary of the Uganda National Oil Company (UNOC) will own shares in the pipeline company (Special Purpose Vehicle), on behalf of the government of Uganda. As of now, the pipeline company (Special Purpose Vehicle) is yet to be incorporated.

    “Negotiations are underway for the setup and corporate structure of the proposed company,  that will run EACOP”, Samantha Muhwezi, the Legal Advisor EACOP at Total E&P Uganda explains. The pipeline company, will build, own and operate the crude oil pipeline project.

    Eng. Muloni said that there is a possibility of bringing on board investors into EACOP in addition to the governments of Uganda, Tanzania and the Joint Venture partners. Once the pipeline company is incorporated, another sticky issue that will have to be ironed out is how the company will meet its tax obligations both in Uganda and Tanzania.  However, at the moment there is already commitment to exempt it from tax.

    “There will be no pay transit tax, no Value Added Tax, no corporate income tax. The government of Tanzania gave us 20 years depreciation tax holiday, granted us a free corridor where the pipe line passes and promised to buy shares in the pipe line,” President Museveni said, while laying a mark stone for EACOP at Mutukula, Kyotera district.

    Financing

    Another issue under consideration is the financing of the pipeline project. At least $ 3.5 billion dollars is needed to finance EACOP. Accordingly, to preliminary information, the funds will be raised through debt and equity from joint venture partners and national oil companies of Uganda and Tanzania. Already, Total E&P Uganda, Tanzania and Uganda have appointed three companies as financial advisors for the pipeline. A consortium of South African based Standard Bank, Imperial Bank of China (IBC) and Sumitomo Mitsui Banking Corporation Europe Ltd, were recently appointed as the financial transactional advisors for EACOP.

    “They are advising us on how to structure the project to enable lenders to be able to finance the project,” Muhwezi said. Sources indicate that IBC is expected to advise CNOOC Uganda Ltd while SMBC will work with Total E&P Uganda, the lead joint venture partner on the crude oil export pipeline. The special purpose vehicle will also charge $12.2 dollars for every barrel of oil that will be transported in the pipeline, making Uganda’s crude oil profitable even at today’s rate of $50 per barrel.

    Technical Specifications

    Uganda’ crude oil has low Sulphur content and therefore, waxy and solidifies at room temperature. This requires heating of the pipeline to at least 50 degrees Celsius to make the crude flow. This means it will require a lot of electricity to heat the pipeline. It will have eight main pumping stations and five heating stations.

    “We might use solar energy to reduce on the power to heat the pipeline,”. Muhwezi said. Once completed, at 1,445 kilometers, the East African Crude Oil Pipeline, will be the longest electrically – heated pipeline in the world.  Uganda will host 296kms of the pipeline, while the remaining 1,149kms will be in Tanzania. In Uganda, the 24-inch diameter, heated pipeline, will go through the districts of Hoima, Kakumiro, Kyankwanzi, Mubende, Gomba, Ssembabule, Lwengo, Rakai. In Tanzania, it will go through eight regions and 24 districts. It will be a buried pipeline, with an estimated 1-2 meters buried underground and planned to have a daily flow rate of 216,000 barrels per day. It will be designed to add volumes of crude from other countries like Tanzania, South Sudan or Democratic Republic of Congo, incase, they want to use it. During construction, EACOP is expected to generate between 10,000 to 15,000 direct jobs and 30,000 temporary jobs at peak.

    Tanzania’s President, John Pombe Magufuli recently pledged Tanzania would now buy crude oil from Uganda instead of incurring high expenses of importing from the Arab world. The Hoima-Tanga route was selected because it offered the least cost route for the transportation of crude oil from Uganda to the East African Coast. Muloni says the Front End Engineering Design report for EACOP and environmental social impact assessment (ESIA) studies, expected to be completed next February, will lead to FID in the first quarter of 2018.

    Edward Ssekika

    Oil.Uganda@actionaid.org

  • Mugufuli makes case for ‘first oil’ before 2020

     

    Tanzania leader wants construction of crude oil export pipeline fast tracked

    Tanzania’s President John Pombe Magufuli wants investors, the governments of Uganda and Tanzania to expedite the construction of the East African Crude Oil Pipeline (EACOP). Magufuli argues that the pipeline should be constructed in the shortest time possible instead of waiting until 2020 to realize first oil.

    Government of Uganda expects to start oil production by 2020 after construction of key infrastructures like the pipeline and the refinery. However, Magufuli believes that first oil can be fast tracked.

    “Let us move forward. Why should we wait until 2020? The investors are here, we have the money, and we have the experts. Investors know in case we start now, they will get the results immediately, so, why should we wait results until 2020. We need this project now,” he said emphatically.

    Construction of 1,445 km crude oil pipeline is scheduled to be completed by 2020. The pipeline project, spearheaded by Total E & P, one of the joint venture oil partners is expected to cost $3.55 billion. Magufuli who is on a three state visit to Uganda was speaking at Mutukula in Kyotera district on Thursday, after laying a cross-border mark-stone for the East African Crude Oil Pipeline (EACOP). He is also expected to lay a mark stone for the EACOP in Kabaale, Hoima on Saturday. “We are ready for the project, we shall be ready, today, tomorrow and we shall always be ready for the project,” Mugufuli explained.

    At the same function, the two Presidents also recognized a team of scientists that spearheaded exploration activities leading to the discovery of oil and gas resources.  Uganda’s Minister of Energy and Mineral Development Irene Muloni said EACOP will support economic growth in the region.

    “As government, we encourage investors to continue supporting national content in the region which is a key factor in our socioeconomic development. We shall put in place the necessary policies, laws and regulations to ensure that our people are trained, acquire employment and entrepreneurship is boosted,” Eng Muloni said.

    Government of Uganda will participate in the East African Crude Oil Pipeline (EACOP) project through Uganda National Oil Company (UNOC). “Not only will the project spur infrastructure development for both countries including road network at a port at Tanga, it will also facilitate and boost trade in the region,” Muloni added.

    She said that building the pipeline from Kabaale to Tanga is premised on being the least cost, least risky route. The 1,445 kilometer heated pipeline is poised to become the longest heated crude oil pipeline in the world. It will provide access to Uganda’s crude oil to the international market. In August this year, the two leaders laid the first foundation stone in Tanga for the East African Crude Oil Pipeline.

    Edward Ssekika

    Oil.Uganda@actionaid.org

  • Australian oil firm Armour Energy joins Uganda’s upstream oil sector

    Muloni Tables Kanywataba Oil Agreement before Parliament signed with Armour

    Gov’t earns Shs 1 bn in signature bonus for Kanywataba oil block

    Edward Ssekika

    Government of Uganda signed a Production Sharing Agreement (PSA), and issued a License for Petroleum Exploration, Development and Production over the Kanywataba Contract Area with Armour Energy Limited (AEL) from Australia.  The exploration license was signed on Thursday, September 14 at Amber House in Kampala. Energy Minister, Irene Muloni signed on behalf of government, while Armour Energy Limited was represented by its Chief Executive Officer.  The Kanywataba Contract Area is located in Ntoroko district.

    Eng. Irene Muloni, Minister of Energy and Mineral Development said, “This is the first Production Sharing Agreement to be signed in line with Section 58 of the Petroleum Exploration, Development and Production Act 2013, the Legal regime under which I announced the First Competitive Licensing Round during February 2015” Muloni said.

    She added, “A signature bonus together with research and training fees, and annual acreage rental fees for the first exploration period amounting to US$ 316,000 have been paid to the Uganda Petroleum Fund”.

    The Kanywataba exploration license has an acreage of 344 square kilometers for four years split into two periods of two years each.  Muloni said, a minimum work program which includes acquisition of seismic data and drilling of at least one well.

    Muloni said, the PSA provides for a requirement to train and employ suitably qualified Ugandan citizens has been provided for in addition to payment of annual training fees to government.

     

    “The award was cleared by Cabinet and the Ministries of Finance, Planning and Economic Development together with that of Justice and Constitutional Affairs. The Minister also said that on Friday 8th September 2017, Cabinet approved the award of two licenses in the Ngassa block and that the agreements would also be signed in a few weeks’ time,” Muloni said.

     

    Weighing in on the exploration license, Robert Kasande, the acting Permanent Secretary, Ministry of Energy and Mineral Development, added that one of the major achievements from this licensing round was the development of a state of the art data room which remains open to the industry to view and purchase data, and will also be used for future licensing rounds.

    “The Ministry was able to generate $ 2.4 million United States dollars (Approximately Shs 8 billion) from the sale of data to bidders which was paid to the Uganda Petroleum Fund”, he said.

     

    Uganda’s first licensing round covered six blocks with a total acreage of 2,674 Km2 in the Albertine Graben, Uganda’s most prospective sedimentary basin. Out of the nineteen (19) applicants at the Request for Qualification Stage, sixteen proceeded to the Request for Proposal stage and four emerged successful and proceeded to the negotiations stage. This first licensing round was undertaken in line with the National Oil and Gas Policy for Uganda (2008) and in accordance with the Petroleum (Exploration, Development and Production) Act 2013.

     

    The signing of a Production Sharing Agreement and an award of exploration license bring the number of companies in Uganda’s petroleum industry to four – Total, Tullow, Cnooc and now Armour Energy Limited.

    PSA tabled before Parliament

    Later, in a move to enhance transparency in the oil and gas sector, the minister tabled before Parliament Production Sharing Agreement (PSA) signed between the government of Uganda and Armour Energy Limited – Australian oil company, over Kanywataba oil block in Ntoroko district.

    The oil sector unfortunately remains shrouded in secrecy. The previous Production Sharing Agreements between government and oil companies have been under key and lock and neither accessible to Parliament not the public. A court case filed by two journalists Charles Mwanguhya Mpagi and Angelo Izama to have the oil agreements made public didn’t yield any results.

    The Minister also tabled before parliament the Intergovernmental Agreement between the government of Uganda and the United Republic of Tanzania on the crude oil pipeline outlining the contents of the agreement.

    Under the Petroleum Act, 2012, the Minister of Energy and Mineral Development is mandated to furnish parliament with periodic reports about the oil and gas sector.

    PSA rubbished

    After tabling the report, the opposition Chief Whip Ibrahim Semujju Nganda moved a motion that the report be differed for further consideration. “We shouldn’t rush through a report of this significance to the country. It is important that Members of Parliament discuss the report, when the atmosphere is peaceful and conducive for discussion not that of intimidation,” Semujju who is also the Kira Municipality MP said.

    On his part, Stephen Birahwa Mukitale (MP Bulisa), dismissed Muloni’s report as lacking. “The report is devoid of figures, it is devoid of the budget, deadlines, how can we talk of oil and even have first oil by 2020 without a budget and deadlines,” he wondered.

    He added, “We need a matrix spelling out the role, budget and responsibility of each and every ministry and department in the oil sector, because this is a multi-sectoral sector, if we are to have first oil by 2020,” Mukitale proposed. Kadaga asked the minister to avail the matrix to the committee.

    He said it is wrong for the Minister of Energy and Mineral Development to purport to speak for the Ministries of Water and Environment, Works and Transport and Uganda National Roads Authority (UNRA) and accused the minister of lack of coordination. “There is no road contractor in Bulisa, don’t take us for granted. Other ministries don’t have a budget for oil and gas activities. The president talked about a budget cut of 10 percent from every ministry to finance oil and gas activities, where is that money,” he wondered.

    Prof Morris Ogenga Latigo (MP Agago North) wants the previous oil agreement to also be tabled before parliament and MPs allowed access.  “I wish the minister could table Production Sharing Agreement for oil blocks where we have already discovered oil,” Ogenga wondered.

    Ogenga who is also the chairperson of Acholi Technical Working Group on oil and gas implored fellow lawmakers to read and scrutinize the Kanywataba Production Sharing Agreement warning them that if parliament doesn’t provide oversight for the sector, then the country would be in trouble.

    Speaker, Rebecca Kadaga, referred the Minister’s report and the Kanywataba oil agreement to the Committee on Natural Resources to scrutinize the report and report back to parliament. However, no time line was given on when the committee is supposed to report.

    About Armour Energy

    Armour Energy Limited focuses on the discovery and development of natural gas and associated liquid resources in Australia. Armour Energy Limited was founded in 2009 and is based in Brisbane, Australia. It has 100% interests in the McArthur, South Nicholson, and Georgina Basins covering an area of 33 million acres in the Northern Territory and Queensland; and interests in the onshore Gippsland Basin, Victoria in joint venture with Lakes Oil NL. The company, through its subsidiaries, also holds interests in 7 exploration permits for minerals in Queensland among other oil and gas exploration works.