Tanzania, Uganda top EA’s project funding needs this year
In November 2018, Uganda announced that it expected to have a conclusive financial deal for the joint pipeline with Tanzania by mid-2019, paving the way for its construction after months of delays that have seen Kampala revise its oil production timelines.
Uganda discovered crude reserves more than 10 years ago, but production has been repeatedly delayed by disagreements with field operators over taxes and development strategy. A lack of infrastructure such as a pipeline and a refinery have also held up output.
“We are now looking at 2022, for our first production from the Kingfisher and Tilenga blocks,” Ms Muloni told Reuters on the sidelines of the Petrotech conference in New Delhi, India, on Wednesday.
“We are preparing for production. We have to build a pipeline for exports and a refinery to add value. So unless those two projects are done we cannot start production,” said Ms Muloni.
In April 2018, Uganda signed a deal with a consortium, including a subsidiary of General Electric, to build and operate a 60,000 barrel per day refinery that will cost between $3 billion and $4 billion. The refinery is expected to be operational by 2023.
A final investment decision for the refinery will be taken by September 2020 and the project is expected to be completed in three years’ time, she said.
Uganda will also take a stake in the project with the majority share being held by Total, adding that the inter-governmental agreement between the two countries has to be signed before moving to the next stage of the project.
“Ugandan oil is heavy and you need to install heaters along the way at four or five different locations … so it is a bit challenging,” he said.
Kampala is waiting for the final investment decision between the governments and the oil partners to determine when the funds will be made available, the terms of the financing, and when the project execution will commence, with a projected timeline of between 30 and 36 months.
Total SA has taken up a 10 per cent stake, while Tanzania and Kenya have taken up eight per cent and 2.5 per cent respectively.
Meanwhile, Tanzanian oil and gas companies have indicated that they will invest around the Uganda-Tanzania pipeline project, especially in Tanga municipality, which is the final destination of the pipeline.