The long awaited Final Investment Decision (FID) between government of Uganda and the international oil companies, French Total Energies and China’s Cnooc has been signed.
This paves way for Uganda’s oil project to head to the next development and construction phases, and subsequently starting of commercial oil production.
President Museveni officiated at the ceremony that was attended Tanzania Vice President Dr Philip Mpango, who represented President Samia Hassan Suluhu.
Eng. Irene Batebe, Permanent Secretary at the Ministry of Energy, who opened the series of speeches at the function held at Kololo Independence Grounds in Kampala, described the day as monumental in the history of the country.
“Today is a monumental day in the history of the two sister countries of Uganda and Tanzania. This day shows that consistency and hard work pay off in the long run, and we want to appreciate the efforts of our predecessors who built the foundation,” she said.
“Now that we have achieved Uganda Oil FID, we’ll intensify issues of coordination, delivery to timely manner of equipment to site, local participation and approvals. We pledge to continuously support the Oil companies in execution of their work Uganda’s journey has been steady and measured. This process has followed deliberate action by the government. Funds have been mobilised, and the project is viable,” she added.
Energy Minister Ruth Nankabirwa said the oil and gas is expected to catapult the country to middle income status.
“The oil industry will positively impact on the economy through various programs. East Africans and Ugandans are expecting to get jobs and the pipeline has its bigger part, which calls for job creation,” she said.
“Close to 160,000 jobs are expected to be created, as well as provision of goods and services to the industry. In addition, Uganda and Tanzania’s tax bases will significantly expand,” she added.
The Board Chairman of Uganda National Oil Company, Mr Emmanuel Katongole, hailed President Museveni for “patiently and wisely guiding the sector when difficult decisions had to be made.”
He asked joint venture partners to expedite work because “the people cannot wait to taste the fruits of oil.”
“We must work together to ensure that a reasonable portion of the US$15billion is taken by Ugandans. Let’s commit to achieving first oil as soon as possible. Make 2025 a reality,” he said.
TotalEnergies SE chief executive Patrick Pouyanne said the FID has come at a time when world crude reserves are declining.
“Therefore the Lake Albert project will provide the necessary quantities to compensate for the declining production,” he said.
“This is a day we are committing to invest $10 billion in the Uganda oil project, mainly the East African Crude Oil Pipeline Tilenga Project and Kingfisher Projects before the first oil in 2025,” he added.
In his remarks, President Museveni explained that Uganda’s oil journey started as early as 1920s by the British. But they didn’t make any headway.
“The British started the exploration of petroleum in Uganda. Our ancestors called that place Kibiro. Our locals showed the British that there was something boiling from underground,” he said.
“The British looked for this oil and couldn’t get it. When I came into government, I read the file. The British Commissioner of Geological said it seems the oil was there but evaporated.
“In 1986, investors approached me about the oil in Lake Albert. I turned them away because I did not have anyone on my side (Ugandan) who understood oil. We then sent people to go and study about oil so that we can engage investors better,” he added.
TotalEnergies EP Uganda and CNOOC are licensed to operate in Uganda after each acquiring a 66.66 per cent stake from Anglo-Irish Tullow Oil PLC.
The FID means launching Uganda’s oil project to the next development and construction phases, and starting of commercial oil production by 2025.
This means TotalEnergies will start construction on its Tilenga oil project in Nwoya and Buliisa districts.
The two oil companies, along with the Uganda National Oil Company (Unoc) and Tanzania through through its national oil company, TPDC, are shareholders in the proposed EACOP which will transport crude oil from the central point in Hoima to Tanga Port en route to the international market. The shareholding in the EACOP holding company is; Unoc with 15 percent, TotalEnergies East Africa Midstream B.V with 62 percent, Cnooc with 8 percent, and TPDC with 15 percent.
The capital expenditure for the 1,443km duct is estimated at $3.55b (shs13trillion), 70 percent of which will be raised from international lenders. The Ugandan section of the pipeline is about 296km through 10 districts and 25 sub counties, and 172 villages, and affecting at least 4,121 persons.