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Government, oil companies agree on next steps


Glad. (L-R) Tullow’s Jimmy Mugerwa, Total’s Loic Laurandel and CNOOC’s Xiao Zongwei at the press conference. (Photo: Beatrice Ongode)

The Uganda government today officially announced it has signed a Memorandum of Understanding (MoU) with the oil companies after agreeing on how the country’s oil resources will be extracted, transported and refined.

Speaking at a press conference in Kampala, Energy Minister Irene Muloni, described the development as a “significant step for Uganda” which is eager to start raking in oil revenues.

“Ugandans are keen to benefit from this resource,” she said. “We want to use the revenues accruing from petroleum for infrastructure development, expand electricity both in capacity and access, make sure the roads are motorable, there is clean water for drinking and production, schools and hospitals are up and well facilitated.”

Protracted negotiations

This announcement follows protracted negotiations between government and the oil companies which, according to industry insiders, has been a cause of frustration for the companies.

But Tullow’s General Manager, Jimmy Mugerwa, dispelled rumours that his company had considered withdrawing from Uganda due to the slow progress of the negotiations.

“We are not exiting Uganda and that is a rumour that has no basis,” he said.

An upbeat Muloni added that the country’s known crude oil reserves are increasing as more appraisals are done and more discoveries are expected. “A lot more petroleum has been discovered,” she revealed.  “The processes of appraising other fields and looking at the field development plans are still ongoing.”

According to government, first oil is expected at the end of 2015 while the refinery will be in place by the end of 2017.

Report by Beatrice Ongode