ministry of energy and mineral development ... · pdf filethe oil and gas sector in uganda...

13th-15th March, 2017ARA Week at the Westin Grand Hotel, Cape Town, South Africa

1

Dr. Stephen Robert IsabalijaPERMANENT SECRETARY

COMMERCIALISATION OF UGANDA’S OIL AND GAS SECTOR: REFINERY AND ATTENDANT

INFRASTRUCTURE DEVELOPMENT

THE REPUBLIC OF U GANDA

MINISTRY OF ENERGY AND MINERAL DEVELOPMENT


PRESENTATION OUTLINE

Introduction

The Oil and Gas Sector in Uganda

Policy, Legal and Institutional Framework

Refinery development in Uganda

Pipeline Development

Investment opportunities


3

1.1 Mandate

The Constitution vests ownership of all minerals and

petroleum (oil and gas) resources in the Government on

behalf of the Republic of Uganda.

The mandate of the Ministry of Energy and Mineral

Development (MEMD) is

"To Establish, promote the Development, Strategically

Manage and Safeguard the Rational and Sustainable

Exploitation and Utilization of Energy, Petroleum and

Mineral Resources for Social and Economic Development“

1. Introduction


4

Introduction….ctd


2.1 Institutional framework

2. Policy, Legal and Institutional Framework

Policy and Licensing

MINISTRY OF ENERGY

(DIRECTORATE OF PETROLEUM)

PETROLEUM AUTHORITY

Regulation of the oil and gas sector

Commercial and Business interest of the

State

NATIONAL OIL COMPANY

MINISTRY OF ENERGY AND MINERAL DEVELOPMENT

(PEPD)

Policy, Licensing, Regulation, Commercial


2.2 Policy and Legal Framework

The National Oil and Gas Policy (2008)

POLICY

POLICY

LAWS

REGULATIONS

AGREEMENTS

LAWS

• The Petroleum (Exploration, Development and Production) Act, 2013

• Petroleum (Refining, Conversion, Transmission and Midstream Storage) Act, 2013

• Petroleum Supply Act, 2003

• Public Finance Management Act 2015 that handles petroleum revenue management

• The Petroleum (EDP) Regulations 2015• The Petroleum (EDP)(Health, Safety & Environment)Rg’ns 2016• The Petroleum (EDP) (National Content) Regulations 2016• The Petroleum (EDP) (Metering) Regulations 2016• The Petroleum (RCTMS) Regulations 2016.• The Petroleum (RCTMS) (National Content) Regulations, 2016• The Petroleum (RCTMS)(Health, Safety & Environment) R’ns,

2016• The Petroleum Supply (General) Regulations 2009• Petroleum (Marking and quality control) regulations, 2009

REGULATIONS

AGREEMENTSModel Production Sharing Agreement and Joint Operation Agreement

The Oil and Gas Sub-sector in Uganda


3. Refinery development in Uganda

3.1 Introduction

• Following the discovery of commercially viable resources, a feasibility study

was conducted to assess the most viable option to add value to the oil and

gas resources.

• The study established that the refinery was commercially viable. It provides

for the capacity, configuration, location, project cost estimates among

others.

• Regional consumption is about 200,000bbl/day with a growth rate of 7%.

• Reduced security of supply and high import bill of about 1 billion USD

annually.



Introduction cont…

The EAC strategy for development of regional refineries was adopted by Partner States in 2008. It recommended that a refinery should be developed in Uganda.

Memorandum of Understanding (MoU) with the Licensed Upstream Companies on Commercialization plan signed in 2014. It highlights three commercialization options;

i. Crude to power

ii. Establishment of the refinery

iii. Crude oil export

The MoU provides that the refinery has to first right of call on the produced crude oil.

Government plans to develop a 60,000 bbls/day refinery with an option of being developed in either single or two phases of 30,000 bbls/day each



Petroleum Products consumption trend since 2012

Year Quantity (barrels per day)

2012 23,535.39

2013 25,081.48

2014 27,102.08

2015 30,324.33

2016 31,826.75

-

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

30,000.00

35,000.00

2012 2013 2014 2015 2016

CO

NSU

MP

TIO

N B

AR

REL

S P

ER D

AY

YEARS

Petroleum Products consumption in Uganda

Trend of consumption ofpetroleum products

The demand for Petroleum products has been increasing gradually. This implies readily available market for the domestic industry

3.2: Demand for Uganda


3.Refinery development in Uganda

3.3: Target Markets for Ugandan Refinery

Ugandan Refinery will target the East African regional market in two zones:

Primary Market:

• Ugandan market

• Rwanda

• Burundi

• Eastern DRC

• South Sudan

Secondary Market:

• Western Kenya

• Northern Tanzania


3.Refinery development in Uganda

3.4 The project Components include;

A 60,000 barrels per day refinery

A 12 inch diameter, 211 km refined products pipeline from Hoima to Buloba near Kampala.

A bulk storage terminal at Buloba



3.5: Project Progress

• The Government is seeking a refinery investor. A competitive process was

conducted in 2013 and terminated in June 2016.

• Since then the Government is promoting the refinery and had engagements

with over 40 Companies that have expressed interest in project.

• Benchmarking on the market sounding, the Ministry is in the searching for a

Lead Investor who will;

design, build, provide 100% finance and operate the refinery

Assume the crude supply, refining and marketing of product risks: a

merchant type of a refinery

• Repayment of investment costs to be made from project revenues.



Capital Costs ~ USD 3.5 Billion

Lead InvestorDesign, Build, Finance and Operate (DBFO)

Ownership Private-Public Partnership (60 : 40)

Project BorrowerSpecial Purpose Vehicle (Refinery Company)

EAC Shareholding Offered 8% of Public Shares each

3.6: Investment Mode



3.7 Actions towards supporting refinery development

• 8 Production Licenses for major oil fields were issued in August 2016 to

ensure production of adequate crude oil.

• Infrastructure to support the refinery developed;

• Major roads to project site and oil fields have been upgraded or are being

upgraded.

• Land for refinery and associated infrastructure acquired.

• Masterplan for development of an Industrial Park at the project site is being

conducted.

• Development of an airport near project site to ease transportation of

equipment and labour.



• Acquisition of right of way for 211 km, 12 inch diameter refined products pipeline from Hoima to Buloba is on schedule with;

Resettlement Action Plan (RAP) study completed

Implementation of RAP is on-going.

Route survey and Environmental Baseline Study completed.

• Land for products Storage terminal at Buloba has been acquired.



16

Pre-FID

Post-FID

• Engineering and design studies

• Environmental Impact Assessment (EIA)

• Engineering, Procurement and

Construction

• Commissioning of first phase

Final Investment

Decision (FID)

12 months from

signing of

Agreements

3 years

Negotiation and endorsement of

Project Agreements • Project Framework Agreement

• Implementation Agreement

• Shareholders Agreement

4 months

3.8: Implementation schedule



The need for a complex refinery and the attendant cost of financing the project

The persistent low oil price causing anxiety whether crude oil development Final Investment Decision will be taken.

Delayed decision on the crude oil export pipeline route.

Availability of financing for Government participation in petroleum infrastructure investments.

Public expectations and anxiety 17

3.8: Project Challenges


4.0: Pipeline Development

• The East African Crude Oil Pipeline (EACOP) will be developed to transport Uganda's

crude oil from oil fields in Uganda to Tanga port in Tanzania in order to access the

international market.

• EACOP project includes the construction of:

a 1445 km long 24 inch insulated and

buried pipeline

6 pumping stations,

2 pressure reduction station and

a marine export terminal at Tanga

4.1 East African Crude Oil Pipeline Project


4.0: Pipeline Development,,,ctd

• Front End Engineering Design (FEED) Commenced in January 2017

and is expected to be completed by end of August 2017. The study is

being undertaken by Gulf Interstate Engineering (GIE) from Houston

USA

• IGA Negotiation between Governments of Uganda and Tanzania is

ongoing and is expected to be completed in April 2017

• Environmental Social Impact Assessment (ESIA) studies have

commenced in Uganda and Tanzania.

• The EACOP to serve as regional infrastructure to deliver crude oil from

Uganda and other oil fields in the region


5.0: Investment Opportunities

• Service provision and contracts in the fields of Engineering,

Procurement & Construction in taking forward the development of the

different infrastructure;

• Development of a Petrochemical Industry;

• Logistical services;

• Waste management;

• Development of Hoima Refinery airport to facilitate logistics during and

after the refinery construction.


Thank YouFurther Information;

PERMANENT SECRETARYMINISTRY OF ENERGY AND MINERAL DEVELOPMENT

[email protected]/[email protected]

21

ministry of energy and mineral development ... · pdf filethe oil and gas sector in uganda...

Documents