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Uganda Sees First Oil Pushed Back To 2022

Uganda expects to start pumping oil in 2022, later than a previous target for 2021, because of lack of infrastructure and disagreements over taxes and plans with operators.

Uganda is now looking to begin production by 2022, from the Kingfisher and Tilenga blocks, Energy Minister Irene Muloni told Reuters on the sidelines of an energy conference in India.

Uganda is one of the hot spots for oil development in sub-Saharan Africa. A newcomer on the oil scene, the landlocked country has welcomed Tullow Oil, CNOOC, and Total in its oil-rich regions. The country’s government sees investments of US$15-20 billion made into its oil industry during the next three to four years and plans to build a pipeline to the Tanzanian coast and a refinery to jumpstart an oil industry.

Uganda will have to build first a pipeline to export its oil and a refinery before starting oil production, minister Muloni told Reuters on Wednesday.

A final investment decision for the refinery would be made in September 2020 and it is planned to be ready three years later, she said.

The Uganda-Tanzania pipeline is planned to run from Hoima, Uganda, to Tanzania’s Port of Tanga. The financing for the project will come 70 percent from the governments of Tanzania and Uganda, with the remaining 30 percent from Tullow Oil and CNOOC. France’s Total also co-owns part of Uganda’s oilfields, and may be negotiating for a stake in the pipeline project. However, the Ugandan government said in December that the pipeline could be delayed as its investors hold out for a higher tariff, beyond the $12.20 per barrel tariff originally agreed upon.

Related: Oil Rises Despite Rising Oil, Product Inventories

In its 2018 results release on Wednesday, Tullow Oil said that the

Environmental Social Impact Assessments (ESIAs) for both Tilenga and Kingfisher were submitted to the National Environmental Management Authority for review, with approval expected in the first half this year.

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“Project financing for the pipeline is progressing well with the development of the financial model ongoing. In the first half of 2019, the JV Partners anticipate completing key commercial, technical and land agreements with the Governments of Uganda and Tanzania as well as the submission of an ESIA for the pipeline to both Governments,” Tullow Oil said today.

By Tsvetana Paraskova for Oilprice.com

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