Uganda edges closer to first oil as major projects near completion

KAMPALA. Uganda’s journey towards commercial oil production gathered momentum in the quarter ended June 30, with construction of key petroleum infrastructure advancing steadily and more Ugandan companies securing business under the country’s local content programme.

The latest quarterly report by the Petroleum Authority of Uganda (PAU) shows that the flagship Tilenga, Kingfisher and East African Crude Oil Pipeline (EACOP) projects all recorded significant progress, bringing the country closer to achieving first oil.

The Tilenga Development Project, operated by TotalEnergies, reached 74 percent completion by the end of June. A total of 234 production wells had been drilled, exceeding the minimum 170 wells required to commence production.

The Kingfisher Development Project, operated by CNOOC Uganda Limited, was 79 percent complete, with construction of the Central Processing Facility and feeder pipeline nearing completion.

Meanwhile, the East African Crude Oil Pipeline (EACOP), which will transport crude oil from Hoima to the Tanzanian port of Tanga for export, had reached 90 percent overall completion. More than 1,443 kilometres of pipeline had been welded across Uganda and Tanzania by the end of the quarter.

Progress was also registered on the proposed Uganda Refinery Project at Kabaale in Hoima District, where pre-Final Investment Decision (FID) technical studies had reached 28 percent completion.

PAU said the milestones underscore continued progress towards commercialising Uganda’s petroleum resources through the development of the infrastructure needed to support production, transportation and refining.

Beyond infrastructure, the report shows that Ugandan companies continue to increase their participation in the sector through the national content programme.

During the quarter, the Authority reviewed 30 bid evaluation reports and approved eight Tier One contracts worth $53.83 million (about Shs197 billion). Of this amount, Ugandan companies secured contracts valued at $8.75 million (about Shs32 billion).

PAU also approved nine Tier Two contracts worth $2.57 million (about Shs9.4 billion).

Cumulatively, the value of approved Tier One contracts has now reached $7.69 billion (about Shs28.2 trillion), with Ugandan companies winning contracts worth approximately $2.3 billion (about Shs8.4 trillion), representing 30 percent of the total value.

Employment in the petroleum industry also continued to expand.

By the end of June, the sector employed 22,234 workers, of whom 18,958—or 85 percent—were Ugandans.

The Authority attributed the growth to continued implementation of government’s national content policy, which aims to maximise Ugandan participation through employment, procurement, enterprise development and skills transfer.

The National Supplier Database also continued to expand, reflecting growing interest from businesses seeking opportunities in the oil and gas sector.

By the end of June, the database had registered 2,635 companies from 39 countries. Of these, 2,277 were Ugandan firms, reinforcing government’s push to ensure local businesses benefit from investments in the petroleum industry.

Government has consistently argued that increasing local participation is critical to ensuring the country’s oil resources generate lasting economic benefits through job creation, business growth and technology transfer, beyond revenues from crude oil exports.

The latest progress report comes as Uganda intensifies preparations for first oil through completion of the Tilenga and Kingfisher upstream developments, the East African Crude Oil Pipeline and the planned refinery, all of which form the backbone of the country’s emerging petroleum industry.

Once production begins, the projects are expected to transform Uganda into an oil-producing nation, while providing new opportunities for local businesses, employment and regional energy trade.