Oil Players to Discuss Risks, Opportunities

Players from Uganda’s oil and gas industry will meet tomorrow at Serena hotel Kampala to seek solutions on how to revive the prospects of a sector that

promised a lot but has instead been hit hard by all sorts of delays and expenditure cuts.

The oil and gas convention comes at a time when Uganda has chosen Russia’s RT Global Resources as a preferred partner in the construction of the refinery, lifted a seven-year moratorium on the issuance of exploration licenses, and opened a new round of licensing.

It is as a result of these new developments by government that the Uganda Chamber of Mines and Petroleum (UCMP), together with Standard Chartered

bank, Zakhem International Construction (ZIC), and the three joint venture petroleum firms Tullow Oil, Total EampP and Cnooc decided to host the convention.

“These new developments give us a good platform to reexamine ourselves and reassess the potential of our oil and gas industry in relation to the general socio-economic outlook of the country,” said Elly Karuhanga, the chairman of the UCMP. He was speaking at Total EampP Uganda’s main office at the Course View building last week.

The forum will be divided in three sessions: The East Africa oil and gas industry, national local participation and a debate on issues of concern. East Africa is now being seen as the most exciting oil and gas frontier after oil discoveries in Kenya, and the huge gas deposits in Tanzania. A regional oil export pipeline that will straddle across Uganda and Kenya is being planned.

Also, a number of East African countries are expected to invest in the Uganda refinery. The issue of local content remains pertinent as Uganda balances the risks of fronting inexperienced national companies ahead of the more qualified foreign firms in an industry that has little or no room for error.

The convention is expected to push for better preparations of Ugandans to take up the opportunities in the oil industry.

“The gist of the conference is to highlight the opportunities that abound for Ugandans. Hence this local content session will highlight the opportunities that are available across the entire value chain, and how Ugandans can best prepare to grab them,” said Herman Kasekende, the chief executive officer of Standard Chartered Bank Uganda.

He added: “We are talking about billions of dollars we need to prepare Ugandans so that the sector can have a multiplier effect.”

A lot of attention will be on the areas of concern. The delay in the award of the oil production licenses has been a thorny issue for some companies. Tullow and Total submitted their requests for production licenses more than a year and a half ago. However, the two are yet to be granted any

licenses. The trouble has mainly centred around the rate of oil recovery.

The companies say the rate is lower than what government is pushing for. Amid all these delays, the price of oil on the international market has dropped from its heady days of more than $100 a barrel. That drop has eaten into the revenue bellies of oil companies such as Total and Tullow. Both Tullow Oil Uganda and Total EampP Uganda recently reduced their staff numbers as a cost-cutting measure.

Karuhanga said: “We regret that there have been delays because many people have lost money, while some employees have lost jobs. We want to remove all future obstacles. But Ugandans should also understand the risk of rushing [into the oil industry].”

It is some of these risks that the convention is expected to shed light on. Uganda has so far discovered 6.5 billion barrels of oil from less than half the area thought to be prospective.

Source : The Observer


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