Uganda expects to have a strategic investor for its oil refinery by February 2017. According to the Uganda Energy and Mineral Development Minister Irene Muloni new firms had expressed interest in the project and fresh talks were underway. This follows the withdrawal of Russian-led consortium RT Global Resources, which had been selected earlier to develop the refinery. According to the minister there are a number of companies that have newly expressed interest in joining in the development of this refinery. She added that some of the interested parties included China’s China Petroleum & Chemical Corp (Sinopec).
In October 2013, the government of Uganda invited interested parties to bid for the construction, operation, and 60 percent ownership of the refinery in a public-private partnership arrangement. The remaining 40 percent was set aside for Uganda and the governments of the East African countries- Burundi, Kenya, Rwanda, and Tanzania.
The refinery will cover 29 square kilometres in Kabaale Township of Buseruka Sub-county of Hoima District. This is in the Western Region of Uganda. The refinery will be close to Uganda’s largest oil fields in the Kaiso-Tonya area, approximately 60 kilometres west of Hoima. Accompanying infrastructure include a new airport, a hospital and roads.
The oil and gas activities are also expected to support the planned Nzizi Power Station, a 52 megawatt thermal power plant, fired by natural gas and heavy fuel oil. Uganda estimates crude resources at 6.5 billion barrels, of which 1.4 to 1.7 billion barrels is considered recoverable. Initially, Uganda said it was negotiating with Russia’s RT Global Resources on a final agreement in 2015, but the talks broke down in 2016. Subsequent negotiations with a consortium led by South Korea’s SK Engineering also collapsed.
Ugandan oil fields are found in the Albertine Rift Basin, west of the country along its border with the Democratic Republic of Congo. Commercial production has been held back by different reasons including wrangling over taxes and the viability of the refinery. Production is now projected for 2020.
Sinopec is courting the Ugandan government and Tullow Oil with an aim of buying into the Uganda oil and gas industry. The Chinese have been going round the world for acquisitions to satisfy their growing demand for oil back home and ensure energy security, taking up assets in Africa, the middle East, South America and Canada. Chinese oil demand represented over 35-40 percent of the world’s new requirements for oil.
The Ugandan Ministry of Energy, in August 2016, awarded eight production licenses with five going to Tullow and three to Total. The companies are now conducting Environmental Impact assessment toward production. However before production there is need for a Greenfield oil refinery and a crude oil export pipeline to the Tanga port on the Indian Ocean.