Annual oil and gas revenue projected at sh7 trillion

Uganda is to earn about $2b (sh7 trillion) in revenues from the oil and gas sector when oil production starts in the next three years.

The revenues will come from the production sharing agreements signed with the oil companies for producing oil in the Kingfisher and Tilenga project oil fields in Buliisa district.

Ernest Rubondo, the executive director at the Petroleum Authority of Uganda, said on Wednesday that apart from the revenues expected from 2025, as construction and implementation activities take place, the country expects to be earning over $8b (sh28.3 trillion) annually.

He explained that the $8b (sh28.3 trillion) will come through linkages with sectors such as agriculture, tourism, health and transport.

The revenues will flow following investments that were unleashed with the announcement of the final investment decisions in February 2022.

This was during the second day of the Annual Oil and Gas Convention 2022 at the Kampala Serena Hotel, organised by the Uganda Chamber of Mines and Petroleum and the energy ministry.

“The Final Investment Decision has unlocked significant investment. The oil and gas sector is projected to contribute $3b (sh3.5 trillion) in investment from this year, up from $0.5b (sh1.7trillion) last year. As investment levels reduce with oil production starting in 2025, Uganda will be earning the revenues annually, depending on oil prices and other factors,” Rubondo said.

He added that the companies undertaking oil activities in Uganda are some of the biggest in the world and are sub-contracting Ugandan companies. He said Ugandan companies are moving from the indirect to direct and specialist services, which testifies to the capacity that has been built.

Rubondo urged Ugandans to go out of their way to seek various opportunities in the industry. He said individuals and companies that seek to work in the oil and gas industry have to get registered in the national talent database and the national supplier database. Over 6,000 Ugandans are now registered in the national talent register, while 1,958 Ugandan companies and 744 foreign firms are registered in the national supplier database.

Rubondo said over $40b (sh142 trillion) are expected to be invested over the following 25 years of operation and maintenance of the oil fields and other infrastructure.

‹‹ Individuals and companies that seek to work in the oil and gas industry have to get registered.

During the panel discussion, Jimmy Mugerwa, the managing director of Zoramu Consulting Group Ltd and board chairperson of dfcu Bank, said many companies have been awarded contracts, but companies and individuals need information early enough to prepare themselves to supply.

Elly Karuhanga, the chairman of the Private Sector Foundation, said Ugandan companies are finding it hard to borrow money from commercial banks. He queried how oil companies can work with local suppliers amidst financing challenges.

Karuhanga urged the tax authorities to restructure their operations to support local budding enterprises joining the oil industry by not strangling them with excessive tax demands.

Edrisa Kwizera, the in-country project representative of Tilenga, TotalEnergies, said the long term outlook on procurement plans are available and quarterly supplier engagements are being carried out so that suppliers can see where to participate.

James Mwangi, the chief executive officer of Equity Group Holdings, said they have set aside $6b for investments to transform the region.

“It is not sufficient, but development banks are supporting us to send capital to the region,” he said.

Mwangi said the bank is working with financial experts from Middle East and the US to support financing strategies for local players in industry.

He said they want to ensure that Ugandans who get contracts in the industry and are in need of financing will get it from the bank.

Oil companies, contractors and subcontractors said there will be direct use for Uganda local expertise, goods and services. They said Ugandan companies will be involved in construction of roads and well pads, as well as providing logistics services.

They said there are planned procurements of items such as water, food, meats, poultry, vehicles, cement, and steel gym equipment. Ugandans are expected to benefit through skills development and certification in driving as well as supplier development and technology transfer.

Source: New Vision

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