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Uganda's first oil production now pushed to 2021

The delay by international oil companies to make a final investment decision has forced government to shift production timelines to 2021 from 2020. 

Energy and Minerals Development minister Irene Muloni admitted that now it will not be impossible have oil out of the ground by end of 2020 as earlier predicted. Muloni said her ministry has henceforth provisionally shifted the production timelines to 2021 and this is also dependent oil companies taking a production investment decision in the  Albertine Graben. 

Muloni made the revelations at the just concluded Africa Oil Week conference in Cape Town, South Africa. Muloni who was one of the conference speakers said that the new 2021 timeline is still in line with industry targets. 

The Joint Venture Partners (CNOOC, Total and Tullow) were expected to make a final investment decision for the integrated Lake Albert project by end of this year. But sources in the industry indicate that the decision is unlikely to be reached within the remaining one month.  

The L.Albert development project expected to produce around 230,000 bopd (barrels of oil per day) when it reaches plateau. The government approved development plans for the project in August 2016 to produce the first 1.2 billion barrels of oil. 

The companies also conducted front-end engineering (FEED) designs and submitted them to government. Muloni confirmed that the government received the FEED design reports but said the government is still going through the processes of approving the designs. 

A source at the ministry of Energy speaking on condition of anonymity told URN the Joint Venture Partners are still involved in evaluations to determine the viability of the projects before they can source $3-4 billion for the refinery and another $3.5 billion for the 1,445 kilometre pipeline to the Port of Tanga.

URN has also learnt that there has been prolonged negotiations between Uganda and Tanzania over the host government agreement for the East African crude oil pipeline as per the inter-governmental agreement between Uganda and Tanzania.

Negotiation of the host government agreement which shall be the framework for the implementation of the oil pipeline project commenced in August 2017 but has been dragging on. 

Some analysts say the delay to start oil development work has allowed time for an extensive exploration and appraisal programme in the Lake Albert area. But there is concern that the shifting of timeline to actual production is negatively affecting some of the industry players. 

A delegation of EU diplomats this week visited some of the oil projects like the development of Kabale airport in Hoima among others. While the donors said they were satisfied with developments, they equally expressed concern about the delays. 

Belgian ambassador to Uganda, Hugo Verbist said infrastructure works around oil have been part of the government's priorities. But he says oil should now be produced so that the social, agriculture and other sectors also benefit.

"We have actually visited EnviroServ, a waste treatment facility and we were very much impressed with the quality but it was disappointing to see that actually now they don’t have much business. Not that there is no waste in the country but there’s not much investment yet for companies to come to such facilities to dispose off their toxic waste." said Hugo.

"Although I have been quite been impressed by the progress made, I think what is important now is that we move forward and that we move quickly forward because there are various facilities that are here now, they are actually ready for use but one important factor is that the oil production starts." 

Hugo added that there are companies that established in Uganda alongside the oil value chain but their activities are almost on standstill because oil production has delayed.

Stephanie Rivoal, the ambassador of France in Uganda perhaps put it more vividly as to why oil production should not be faced with further delays. 

"We can do more if the projects move ahead quicker. When I go to my government and ask for more cheaper loans for Uganda for more projects, they are asking me for one question. How much was dispersed and done a year before on the project?," she said.

"And If I say that $200m [is] outstanding pending a number of approvals and studies which are normal but are not being disbursed, they will turn me down for the year…The funds are available every other year but the disbursement is also one condition to go ahead and finance yet another project. 

The French government has been behind Total E&P which is one of the Joint Venture partners CNOOC and Tullow.

Comments

+1 #1 gwok 2018-11-12 01:34
I understand the international strategy that is at play here. In summary: (1) the world is moving fast towards greater use of non-fossil energy resources [uncertainty about the future of petroleum energy resources].

(2) Uganda is moving towards the end of this regime [political uncertainty in the post-M7 era, especially the validity of their oil contracts, which could become questionable thereafter]. I have a weak supporting database about this last point, so, please have your say.
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+1 #2 kabayekka 2018-11-12 11:26
Indeed if the French dollars 200 million is not yet dispursed by the poor country of Uganda, and is pending approval, who is going to pay back that sort of money to the people of France in 30 years time plus 5% interest?

And mind you, the world is waking up to reduce its dependence on Fossil fuel.
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+1 #3 Kelly 2018-11-12 14:12
Allow my pessimism to take the better of me here.

These “Western” Diplomats, are they really driven by the need to see ordinary Ugandans “benefitting” from oil or more to do with the delay costing their countrymen more from smiling all the way to the banks?

Have the likes of Cameroon, Guinea Bissau, Gabon, Angola, Congo Brazzaville seen the percentage of those in absolute poverty drastically reduced as a result of oil activities, or rather absolute poverty has increased absolutely?

I can’t imagine a French, a Belgian, an Italian being more concerned about the welfare of ordinary Ugandans unless of course it is just a gimmick to skin us of our resources to the marrow.
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0 #4 rubangakene 2018-11-12 19:02
Records from 1920s show that part of the Albertine Oil (two-thirds) lie in the present Congo, an issue that was a bitter acrimony with the then King Leopold of Belgium when The then Uganda government granted first exploration rights to the Anglo-Iranian Petroleum Company.

Now if we keep dithering to drill this oil, some clever chap from Congo could beat us to it; hence the shared basin, what do you think?
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0 #5 gwok 2018-11-12 21:43
Quoting kabayekka:
Indeed if the French dollars 200 million is not yet dispursed by the poor country of Uganda, and is pending approval, who is going to pay back that sort of money to the people of France in 30 years time plus 5% interest?

And mind you, the world is waking up to reduce its dependence on Fossil fuel.
.

For French dollars, please read the Euro. The French are in the EU completely & their earlier Franc is no longer a valid currency.

Anyway, the point that you made above remains valid - our accumulated debt under this regime will not be bearable in the future [assuming that Uganda will remain the same Uganda that we know today thereafter post-M7].
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0 #6 The Ugandan.... 2018-11-13 13:10
M7's downfall will be his dealings with the French.

The moment Total got involved in UG's oil, was when Uganda sold its soul.

I pray & hope M7 does not go the way of M. Muammar Mohammed Abu Minyar Gaddafi.

These people are bad news!
A deal is only as good as the parties involved in it.

Belgians are even worse!
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0 #7 Joel 2018-11-13 15:10
Hahahahaaaaaa Bosco! you want to use our oil as a political tactic.

The problem you have eyes but you can't see you have ears but you can't hear. you are now like NDIWULIRA.
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0 #8 Fuller 2018-11-13 18:17
Quoting The Ugandan....:
M7's downfall will be his dealings with the French.

The moment Total got involved in UG's oil, was when Uganda sold its soul.

I pray & hope M7 does not go the way of M. Muammar Mohammed Abu Minyar Gaddafi.

These people are bad news!
A deal is only as good as the parties involved in it.

Belgians are even worse!


Despot-for-32-Years is (most likely) already too deep in with the French.

Desperation avails him little-to-no-time to think deeply -- which is a good thing for Uganda. End of my comment for today.
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