Oil & Gas News

$1 Billion Oil Cash Earmarked For Ugandan Businesses In 2022

Bro Group and Threeways Shipping ED Oscar Baitwa (L), Rubondo and Nankabirwa (R)

About $3.5 billion is said to have been invested in Uganda’s oil and gas sector during the exploration and appraisal phase – between 1997 and 2016.

Today, the same sector is projected to attract about $3b in investments in 2022 alone, as the development phase takes shape.

This increased outlay follows the February 2022 taking of the Final Investment Decision (FID) that kicked off various development projects ahead of First Oil production in 2025.

“We are witnessing the opening up of opportunities for Ugandans and Ugandan enterprises at a scale that has not been witnessed in the country before,” says Ernest Rubondo, the Executive Director, Petroleum Authority of Uganda (PAU).

He was speaking at PAU’s third annual National Content Conference this week, which was held under the theme ‘Creating Lasting Value Through Enhanced National Participation to Accelerate Uganda’s Socioeconomic Transformation.’

He noted that out of the $3b to be invested in the sector this year, contracts valued at over $1b would be awarded to Ugandans and Ugandan companies; five times more than what was realized last year.

Importantly however, this $1b in 2022 alone, dwarfs the $943m (28 per cent of the total spend) Ugandan enterprises achieved at the peak of exploration between 2008 and 2016.

Philippe Groueix, General Manager, TotalEnergies-Uganda

The ongoing development phase is the most intensive since it precedes oil production. At least $15 billion is expected to be spent in the lead up to commercial production in 2025, with local enterprises mainly eying contracts within the 16 categories (of goods and services provision) that have been ring-fenced for them.

Currently, Mota Engil-Uganda and Excel Construction are executing the civil works contracts to prepare the industrial areas for TotalEnergies EP’s Tilenga and CNOOC’s Kingfisher projects respectively.

Infrastructure like Central Processing Facilities (CPF), construction camps, drilling support bases and operation support bases will be built at the two stations.

Speakers at the conference representing the licensed oil companies (TotalEnergies EP, CNOOC, UNOC, EACOP), their major contractors (McDermott-Sinopec, ZPEB, CCJV, Luwero Industries, CPPE, WorleyParsons) together with already contracted Ugandan companies like MSL, Pearl Engineering, Atacama, Threeways and Living Earth, highlighted many of these opportunities presented by the Tilenga, Kingfisher and East African Crude Oil Pipeline (EACOP) projects.

Several other local companies like Beta Projects, Future Options Consulting, BTS Clearing & Forwarding Ltd, GCC, Zoramu Consulting Group, SKYZ, Bemuga, Q-Sourcing, Threeways Shipping Services and True North are also executing various contracts under joint ventures with foreign firms.

GCC CEO Aggrey Ashaba (C) chats with Anne Juuko CEO Stanbic Bank (R) and Rubondo

“Government is committed to increasing the participation of Ugandan citizens and enterprises in the oil and gas sector from the current 28 per cent to 80 per cent by 2040,” said Ruth Nankabirwa, the Minister of Energy and Mineral Development, adding that the sector had the potential to get many Ugandans out of poverty as detailed in the National Development Plan (NPD) III.

The linkages between oil and gas and other sectors of the country’s economy including environmental and social governance, contract financing and taxation were emphasized at the summit, as well.

“There are very important benefits that can accrue from linking oil and gas to other sectors of the country’s economy,” said Rubondo.

Also sharing various key insights especially on policy were representatives from government institutions that regularly interface with the sector including the Uganda Revenue Authority (URA) and the National Environmental Management Authority (NEMA).

Tony Odokonyero, a Research Fellow based at the Economic Policy Research Centre (EPRC), highlighted data from an ongoing research which revealed that a lot more opportunities remained untaken especially in the areas of food supply, health and housing services, as the Albertine region witnesses an influx of people and businesses seeking petroleum fortunes.

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Deep Earth
Deep Earth International critically examines developments in the extractive and energy sectors in Uganda and the wider East African region. Drawing from the vast experience of its founders who have each covered and written about these sectors for at least fifteen years, this website is the go-to platform for anyone seeking to get a better understanding of the same.

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