Uganda awaits pipeline, refinery construction to begin oil production

Oil prices dip as U.S stockpiles increase
Illustrative picture. PHOTO CREDIT: SHIPS & PORTS archive

Uganda’s Energy Minister, Irene Mulonion, on Wednesday, said until the landlocked country builds a crude export pipeline and refinery, production of oil will be delayed.

“We are preparing for production. We have to build a pipeline for exports and a refinery to add value. So unless those two projects are done we can’t start producing,” she said on the sidelines of the Petrotech conference in India.

The East African country discovered crude oil reserves more than a decade ago but has often delayed production due to disagreements with field operators over taxes and development strategy as well as a lack of infrastructure such as a transportation pipeline and a refining facility.

Uganda last year signed an agreement with a consortium to build and operate a 60,000 barrel per day refinery. The refinery is expected to be operational by 2023.

A final investment decision for the refinery, according to the minister, will be taken by September 2020 and the project is expected to be completed in three years time.

Mulonion added that Kampala is considering beginning production of oil in 2020.

She said, “Production we are now looking at by 2022, our first production, from Kingfisher and Tilenga blocks.”

China’s CNOOC and France’s Total and London-based Tullow Oil have the stakes in the two areas. CNOOC is the operator of Kingfisher area while Total leads the development of Tilenga.