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$3 billion to be invested in Uganda’s oil sector in 2022

In what will be the biggest spend in the history of Uganda’s oil industry, and indeed in any other sector, in a calendar year, up to $3 billion worth of contracts are to be won this year as the country races towards achieving First Oil by early 2025.

The revelation, made by Ernest Rubondo, the Executive Director of the Petroleum Authority of Uganda (PAU), during the institution’s annual press conference, offered yet another strong hint that investments in Uganda’s oil project have been sanctioned.

There has been some bit of uneasiness in some circles over the absence of a formal announcement of a joint Final Investment Decision for Uganda’s oil project. So much so that some industry players feel that investments in Uganda’s oil industry were not yet certain.

Rubondo’s declaration, therefore, offers more certainty of events in the industry, with the $3 billion estimated for this year topping all the other years since commercial oil deposits were discovered in the country in 2006.

A lot of the investments for this year will target preparation works for the East African Crude Oil Pipeline Project (EACOP) and the two different oil fields – Tilenga and Kingfisher after the launch of the projects in April 2021.

While the $3 billion will be invested in 2022, Rubondo said the unlocked contracts so far are all worth $6 billion meant for over 40 work packages which had been submitted by the licensees to PAU for approval before they are awarded.

The contracts include civil works, drilling, construction of well pads, well management and design and construction of residential camps for workers, among others.

Last year $500 million was invested in the sector. Before that, $180 million was spent in 2020 and $230 million in 2019.

Rubondo said that while operations in 2020 almost ground to a standstill due to Covid-19 interruptions, at least 413 procurements worth $14 million were undertaken that year, with 392 of these procurements (92 per cent) worth $12.9 million was contracted to Ugandan entities.

Between January and September 2021, Ugandan entities provided goods and services worth over $48 million out of a total procurement valued at $91 million.

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