Uganda has announced that it could start producing commercial oil by 2016, great news for the East African nation who is looking to reduce its energy bill, and gain more independence and security.
Currently Uganda, a landlocked country, must import all of its fuel, with the majority arriving via truck from the Mombassa seaport in Kenya, several hundred miles away. This method of transportation is unreliable and costly, and Uganda is hoping that by building its own refinery it will be able to dramatically reduce the imports needed.
Oil was originally discovered in Uganda back in 2006 by Hardman Resources of Australia, and reserves have been estimated in the region of 3.5 billion barrels. Production has been delayed due to a debate over the viability of building a local refinery.
Total and CNOOC, who each bought a third of Tullow Oil’s exploration assets in Uganda back in 2012 for $2.9 billion, have agreed to build a small refinery, but claimed that the larger refinery Uganda had been hoping for just couldn’t be justified given the low local demand. Instead the plan is to build a pipeline to export the majority of the crude via Kenya to the Indian Ocean where it will be sold on the international market.
Fred Kabanda, a geologist at Uganda’s petroleum exploration and production department, said that the 30,000 barrel a day refinery will be operational by 2016 at the earliest, and plans exist to double the output by 2018.
By. Joao Peixe of Oilprice.com
Joao is a writer for Oilprice.com