KAMPALA, The Uganda government says it has agreed preliminary terms with a consortium of investors, including United States conglomerate General Electric (GE), to build and operate the country's first oil refinery, reviving a much-delayed project.

Government geologists estimate that Uganda's oil reserves stand at 6.5 billion barrels, of which 1.4-1.7 billion are considered recoverable.

The Albertine Graben Refinery Consortium, which also includes Yaatra Ventures LLC, Intra-Continental Asset Holdings Ltd. and Italy's Saipem SpA, was picked after a review of more than 40 companies, Uganda's Energy Ministry said in a statement here Monday. The oil is due to start flowing in 2020 and the government is keen to build a refinery to process the oil locally and retain a larger slice of profit

Uganda has been seeking a new developer for the 4.0 nillion USD facility since negotiations with groups led by Russia's RT Global Resources LLC and South Korea's SK Engineering and Construction Co. collapsed. GE has recently expanded in the industry by teaming up with Baker Hughes Inc., while Saipem, a 4.1 billion USD company based in Milan, has operated for more than 50 years.

The risk to the project getting delivered is smaller because those companies are both very good at what they do, Alan Gelder, vice-president of refining, chemicals and oil markets at consultants Wood Mackenzie Ltd., said by phone.

Gelder said it was difficult to estimate the cost of the project because Uganda does not yet have all the infrastructure it needs to bring equipment into the landlocked country.

The government expects to conclude a project framework agreement with the developers over the next two months, according to the Energy Ministry.

The consortium has proposed to government a financing approach and a path to establish, develop and operate a commercially-viable refinery company with a strategic benefit to the country and the region, the ministry said. The oil refinery is expected to spur growth of petrochemical and other related industries in Uganda.

Energy and Minerals Development Minister Irene Muloni said in November that France's Total, one of three oil explorers operating in the country, wanted to take up a 10 per cent stake in the refinery project.