Oil Development Phase Set

On an Emirates Airlines flight some time back, Ernest Rubondo, the commissioner in the Petroleum Exploration and Production Department (PEDP) in the Ministry of Energy and Mineral Development, saw an aert in the airline’s onboard magazine, which indicated that the airline had introduced a new flight to Luanda, Angola. The explanation was that a new route was necessary to transport thousands of workers from Asia to work in the African country’s booming oil industry.

Speaking to senior editors at a workshop in Kampala, Rubondo said such a scenario could happen to Uganda if concrete efforts are not taken to ensure that Ugandans benefit from the nascent oil and gas sector. Indeed, the government is pushing for more involvement by Ugandans in the oil and gas sector as the industry enters the long-awaited crucial development phase.

Officials said it is imperative that as many Ugandans as possible should target to benefit from the numerous opportunities in the development phase following the completion of the exploration phase. The Chinese company CNOOC late last year submitted a Field Development Plan (FDP) and a Petroleum Reservoir Report (PRR) for the Kingfisher Oilfield, documents which were accepted by the Government, in accordance with the Petroleum Act and International Petroleum best Practices. This effectively marked the onset of the development phase of the petroleum value chain. The plan is to implement a phased 60,000 barrels per day oil refinery starting with 30,000BPD, which is expected to be in place by 201718. Two companies RT – Global Resources of Russia and SK Group from South Korea, have been pre-qualified for selection.

An evaluation team led by transaction aisor, Taylor De Jongh, is set to pick the lead investor before the end of the year, according to Irene Batebe, an official of the PEDP. The process of procuring the investor for the construction of a pipeline to export some of the crude oil is also going on. Fred Kabanda, the head of the PEDP’s regulatory unit, said after 12 years of exploration, the development phase should be of much interest to Ugandans as it presents numerous opportunities as it involves the largest projects ever in Uganda’s history.

“The development phase, which we are going into, is going to be the most important,” he said. He said some 116 wells have been drilled so far but another 700 wells will be drilled in the next four years. The total anticipated development cost for the whole sector is estimated at over $10b – for the refinery, central processing facilities, and the oil pipelines. “So far, we anticipate that we shall have spent $3 billion by end of 2014. There are big opportunities for Ugandans to participate,” he added.

He said the government has put in place policies that the favour participation of Ugandans, while the oil companies are also willing to increase the capacity of Ugandans to get involved in the sector. He added, “It is a very important phase that we are going into. There are no shortcuts – the oil companies have to spend in the development phase and it is this money that the Ugandans have to target.”

He said in response to the low skills in the labour market, the government is prioritizing capacity building for public officials to help them make decisions from an informed position. Some 150 have been trained across the government institutions in the various sectors. Indeed, the 201314 government budget for training was set at $2 million for the oil and gas sector. At Uganda Petroleum Institute at Kigumba, the pioneers have now graduated and have been absorbed into the sector. Also, an undergraduate Petroleum and Geosciences course was introduced at Makerere University in 2010 and the first intake of 46 students graduated in January. In collaboration with the Bergen University of Norway, a Masters Degree has also been introduced.

Given that the oil and gas sector has important implications on other sectors – infrastructure, agriculture, energy among others, Ugandans are being urged to remain vigilant if they are to tap into those opportunities. Oil companies such as Tullow are working with farmers to supply agricultural products in Hoima District.

National Content policy set:

Also, the government is finalising the National Content Policy and Plan, aimed at driving capacity building, enterprise development and to help monitor national participation and evaluate how the locals are getting involved. The document will be ready before the end of the year. Another skills building strategy is being worked on with support from the World Bank. Oil companies recently released an industrial baseline survey, which found out that there was need for a focused assistance to target enterprise development to help Ugandan investors. Also, they found that there was need to support training institutions and systems to produce quality graduates. “If not we will have many Chinese, Koreans and Indians coming over to do these low entry jobs, which should have been done by Ugandans,” Kabanda warned.

Rubondo dismissed claims that the government was “too slow” leading to frustration on the part of the oil companies. He said the crude oil they would produce has to be put somewhere so if there is no pipeline or refinery the production phase would be of no consequence. The PEDP recently upgraded the total amount of oil to 6.5 billion barrels from 3.5 billion barrels.

Source : The Independent

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