Uganda in Advanced stages to Build a USD 1 Billion Oil Pipeline

15-April-2012

The government is set to construct two hubs within the Albertine region to feed the proposed oil refinery in Buseruka, Hoima district.

Plans are in advanced stages to set up a $1b (sh2.5trillion), 60,000 barrels of oil per day facility to refine the oil after government put a caveat on exportation of crude.

A northern hub with a 97km-heated pipeline is set to be constructed to evacuate oil from Kasamene, Jobi-1, Nsoga and other oil wells in the north.

A second southern hub with a 46km-heated pipeline will also be constructed to feed the refinery, evacuating oil from Turaco, King Fisher and other oil wells in the south.

“For every 100 barrels of oil, 40 will be for government in addition to the payment of royalties, sharing of profits and payment of taxes on the remaining 60 barrels during the cost recovery phase,” said Dozith Abainomugisha, the principal geologist at the Petroleum Exploration and Production Development (PEDP) of energy ministry.

“Uganda will begin to earn revenues the moment production starts and not after exploration companies recoup their costs,” he added.

Abainomugisha was addressing the press at a recent media briefing at Hotel Africana.

Uganda’s oil is sweet and waxy meaning that it has a limited sulphur content which makes it good oil. However, it solidifies at room temperature meaning that the oil pipeline has to be constantly heated to enable the oil to flow.

Abainomugisha noted that while Ghana formed an exploration company to form a joint venture with foreign exploration firms, Uganda is completely outsourcing the phase.

As a direct result, Ghana does not have Production Sharing Agreements (PSAs) but has a revenue sharing framework which has been made public.

He explained that it is international practice to keep certain details of PSAs secret as the government has done. There are six PSAs currently running with exploration companies in the oil-rich Albertine region.

By Samuel Sanya: The New Vision Newspaper