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Kenya, Rwanda to request Uganda refinery shares

Saturday February 28 2015
refinery 2

Uganda’s planned refinery will be built in modular form starting with 30,000 barrels. PHOTO | FILE

Kenya and Rwanda will present their requests for share participation in Uganda’s 60,000 barrels-a-year crude oil refinery, which should be operational by 2018.

A consortium led by RT Global Resources of Russia has been selected as the preferred bidder to be lead investor for building the refinery, which will produce petroleum products for domestic consumption and export.

Uganda has discovered 6.5 billion barrels of oil and last year the government invited Kenya, Rwanda, Tanzania and Burundi — as members states of East African Community — to subscribe to shares in the plant. The refinery will be built in modular form starting with 30,000 barrels before capacity is increased.

“The other four EAC partner states have shown interest in taking up some of the public shares. Tanzania and Burundi are still reviewing the studies related to the project,” said Gloria Sebikari, senior communications officer in the Energy Ministry.

She said Kenya and Rwanda, under the Northern Corridor Integration Projects (NCIP) are expected to formalise their interest at the next Summit to be held in March.

READ: Kenya acquires 2.5 pc stake in Uganda refinery

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The Summit was scheduled for mid-February in Kigali, Rwanda, but was postponed to early March. The initial two-day session of experts and other senior government officials is scheduled to start on March 4.

It will be followed by ministerial deliberations on March 6 and the Heads of State Summit on March 7. Leaders from Kenya, Uganda, Rwanda and South Sudan will look for ways to fast track NCIP projects.

At the Summit, Kenya is expected to commit $61 million to acquire a 2.5 per cent stake in Uganda’s crude oil refinery, which will be built in Hoima district, bordering the Democratic Republic of Congo.

Kenya’s Energy Principal Secretary Joseph Njoroge said in January that the country had made a decision to consider Uganda’s offer for shares in the refinery.

“In line with the spirit of regional co-operation we committed to support each other in key infrastructure projects, so we shall support the Ugandan one. We shall take up a minimal 2.5 per cent stake in the refinery project,” said Mr Njoroge.

A refined fuel pipeline will be constructed from Eldoret in western Kenya to Kampala in Uganda. The reverse flow pipeline will have the capacity to pump products either to Kampala or Eldoret depending on demand patterns.

The first phase of the refinery is expected to start operating in 2018. Tullow Oil Plc, China National Offshore Oil Corporation and Total of France are expected to start oil production in the Albertine basin in western Uganda in 2018.

Tullow, Total and CNOOC, who are licensed in Albertine basin, have signed an MoU with Uganda for commercialisation of discovered resources and development of the refinery. It includes use of crude to generate electricity and export of the raw fossil fuel.

Uganda will conclude a maiden licensing round in October 2015 for firms to competitively bid for oil blocks. The open door policy of companies directly negotiating with the government was stopped in 2008.

Energy and Mineral Development Minister Irene Muloni said Uganda had lifted the moratorium and is offering six blocks covering about 3,000 square kilometres.

“We have not licensed any new acreage since 2008 in order to put in place the required legal, regulatory and institutional framework to ensure an open, efficient and competitive licensing process,” she said.

The areas are Turaco and Kanywataba blocks in Ntoroko district, Ngassa acreage in Hoima district, Taitai and Karuka block in Buliisa district, Mvule acreage in Yumbe and Moyo districts, and Ngaji block in Kanungu and Rukungiri districts.

“The ministry will release more detailed information on the blocks during the upcoming seventh East African Petroleum Conference and Exhibition, which will be held in Kigali, Rwanda from March 4 to 6,” said Ms Muloni.

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