Uganda’s Oil And Gas Management Gets Stronger And Close To Delivery

Uganda's Albertine Graben is now a mature oil and gas province and where government issued nine petroleum production licenses to Total E&P Uganda, CNOOC (U) Ltd and Tullow Uganda Operations Pty Ltd.

According to Article 244 of the Constitution, all minerals and petroleum in, on or under, any land or waters in Uganda are vested in the Government on behalf of the Republic of Uganda.

Sustainable resource management requires an inclusive and comprehensive national strategy. In managing Uganda’s petroleum resources, The National Oil and Gas Policy for Uganda 2008 has been developed. This is the key document guiding the sector.

The  goal  of  the National Oil and Gas  Policy  for  Uganda is to “Use the Country’s Oil and Gas Resources  to  Contribute  to  Early  Achievement  of  Poverty Eradication  and  Create  Lasting Value to Society”. 

In 2013 following a consultative process Parliament and the executive enacted two laws. These are the Petroleum (Exploration, Development and Production) Act 2013 and the Petroleum (Refining, Conversion, Transmission and Midstream Storage) Act 2013. Regulations have been made to operationalize these laws.

The Oil and Gas Revenue Management Policy 2012 was developed which details the management of expected petroleum revenues. The Public Finance Management Act 2015 was also enacted which establishes the Petroleum Fund into which all petroleum revenues received by government will be paid. 

The Government uses other laws such as The National Environment Act 1998, Income Tax Act, Land Act 1998 to regulate the petroleum sector.

Key development partners like Norway provided support to Uganda towards the formulation of policies and laws to enable Uganda escape the resource curse. The Government has put in place key institutions like The Uganda National Oil Company (UNOC) and the Petroleum Authority (PAU).

According to Eng. Irene Muloni, the minister for energy and mineral development government recognized that petroleum could be put into beneficial use for all Ugandans.

Muloni says the key institutions have been put into place to ensure a transparent and accountable use of natural resources. She added that the crude oil will undergo value addition refining, some of the crude will be exported, part of it used to generate power and gas will be used for cooking, lighting.

“We want our people to participate in the oil and gas industry and not just be observers. We are targeting first oil by 2020. We are working with all our partners on this. We want oil to enable Ugandans reach middle income status by 2020, which has become a magic year for Ugandans,” Muloni says.

UNOC is joining international oil companies in the production development of oil and gas in the King Fisher Development Oil Field located in Hoima district.

Peter Muliisa, chief legal and corporate affairs manager UNOC says the company is concluding the backing-in process to enable it manage the 15% State participation interest and other Government commercial interests in the Kingfisher Development Area (Hoima) and Tilenga Development Projects (Buliisa & Nwoya) on behalf of the State.

UNOC plans to embark on exploration and new ventures to optimise product ion sustainability and is in the process of analyzing data acquired from the PAU for identified prospects in the Albertine Graben. UNOC intends to proceed with exploration in partnership with a potential joint venture partner or a consortium of them as soon as data analysis is concluded.

Journey to First Oil

Muliisa says UNOC is keen to have first oil by 2020 and is doing everything within its mandate and means to contribute to having this plan attained. “UNOC is closely working with stakeholders at all levels, across all critical areas such as Infrastructure and logistics, land acquisition, Environmental and Social Impact Assessments, water extraction and excess gas utilisation to ensure this important government target is achieved,” Muliisa explains.

UNOC intends to develop, build and operate the multi-user petroleum refined products storage terminal at Namwambula village, near Kampala through a joint venture. UNOC has been managing the Jinja Storage Terminal since end of May 2017 and plans to include use of barge transport over Lake Victoria to ease transportation of petroleum products to the terminal.

UNOC is working on a local content incubator program with key stakeholders to ensure individuals and local companies are trained, equipped and empowered to access business opportunities in the oil and gas industry.

The mandates of UNOC are: Handle the state’s commercial interests in the petroleum sub-sector; manage State participation in petroleum activities; manage the marketing of the country’s share of petroleum received in kind; manage the business aspects of state participation; develop in depth expertise in the oil and gas sector.

Others are to optimise value to its shareholders; participate in joint venture in which it holds an interest on behalf of the State; participate in meetings of the operating committees in furtherance of its participation in the respective Joint Operating Agreements; and investigate and propose new upstream, midstream and downstream ventures initially locally but later internationally

“The overall function of UNOC is to handle the State’s Commercial interest in the Oil and Gas industry and ensure that the resource is exploited in a sustainable manner,” Muliisa observed.

The PAU is a statutory body established under Section 9 of the Petroleum (Exploration, Development and Production) Act 2013, and in line with the National Oil and Gas Policy for Uganda which was approved in 2008.

The PAU’s mandate is to monitor and regulate the exploration, development and production, together with the refining, gas conversion, transportation and storage of petroleum in Uganda. 

These include ensuring that petroleum operations in Uganda are carried out in accordance with the relevant laws, regulations, guidelines, statutes and in line with international best practice for the petroleum industry.

According to Ernest Rubondo, the executive director PAU some of the roles of the organization include; review of submission from the licensed oil companies including reports on geoscience, engineering studies, annual resource reports, annual audit and procurement reports.

PAU advises the minister of energy on the grant of production licenses, these have included the eight production licenses which were awarded to the oil companies at the end of August 2016.

PAU reviews and approves budgets and work programmes submitted by the licensed oil companies. They monitor field activities carried out by the licensed oil companies in the fields, carry out stakeholder consultations for land to be acquired and used during the development of infrastructure and production phases of the petroleum v

The authority participates in developing the legal frameworks like the Inter-Governmental Agreement and the design aspects of the East African Crude Oil Pipeline.

Regulating the implementation of national content development including aspects like the employment, training of Ugandans and the provision of goods and services by Ugandan enterprises.

“PAU will work with all stakeholders to professionally, effectively regulate the sector in a manner that achieves the goal of using the country’s oil and gas resources to contribute to early achievement of poverty eradication and create lasting value to society,” Rubondo says.

 

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