Delay To Produce Oil Should Be Looked At As A Blessing

Dr. Elly Karuhanga Dr. Elly Karuhanga

Uganda, despite discovering oil and gas in 2006, has failed to produce it but this delay, according to some key members of the private sector, is a blessing. While the delay to reach first oil has caused anxiety in some circles, Dr. Elly Karuhanga, the Chairperson Uganda Chamber of Mines and Petroleum (UCMP) has his reasons to count it as a blessing.

“The oil and gas industry can be so much likened to taking a flight. Before a plane takes off from the ground, so much preparation goes on, cleaning, loading luggage, fueling, cockpit and cabin checks etc, once this plane starts taxing, if one is not on board, then it will be to late for them, he said.

Therefore, because of this delay, Dr. Karuhanga, asserts that Ugandans and Ugandan entities have a chance to organize, skill up, put systems in place, upgrade standards and create meaningful mergers to raise the required capital and technical ability to be able to meaningfully benefit from the sector.

But the former president of Tullow Oil Uganda is quick to say that the country can’t wait forever and is optimistic that the year 2019 will a year of action. “It will not be business as usual,” he told a press in Kampala where they announced the 5th Annual Oil & Gas Convention scheduled for Speke Resort & Conference Center in Munyonyo.

He emphasizing that this year is decision time, a reference to the expected Final Investment Decision (FID), a tool to be used by International Oil Companies (IOCs) to decide how much and where to put their money enroute to producing the country’s oil and gas. The countdown to commercialization of our oil is on, he said.

Over the years, Uganda has been setting targets to realize first oil but it has, we all know, failed get the hydrocarbons out of the earth’s core. Oil companies, Total E&P, CNOOC Uganda and Tullow Oil Uganda, operating in a Joint Venture partnership, had to wait for years to get production licences.

Now, with a couple of Front End Engineering Design (FEED) studies complete, the JV partners are working on reaching the all-important FID and for government to pronounce the preferred Engineering, Procurement and Construction (EPC) contractor to further pursue field development, infrastructure building and contracts awarding.

Mr. Peter Muliisa, the Head of Legal and Corporate Affairs at Uganda National Oil Company, and closely working with the teams pursuing FID, said key elements have been agreed on and the decision should be made by June this year. Same discussion are in advanced stages for the Host Government Agreement (HGA) between Uganda and Tanzani to speed up development of the East African Crude Oil Pipe Line (EACOP).

Once these back and further talks are wound and decisions made, then the private sector, those who will have prepared themselves, will literally ‘swim’ in oil money. The private sector and Civil Society Organizations (CSOs) have been lobbying government and the international oil companies to help Ugandans build capacity, skills, standard so that they can competitively by absorbed by the high demanding oil and gas industry.

Total and CNOOC have in past twelve month took on Ugandans to undertake welding training with the help to Q-Sourcing’s TASC project and Sunmaker Oil & Gas Training Institute. On its part, government set up Uganda Petroleum Institute – Kigumba (UPIK) and other programmes in the ministry of education and sports. Several private institutions are training and preparing Ugandans to work in the industry.

And with these talents graduating and business getting the right capacity, Petroleum Authority Uganda (PAU) set up the National Supplier Database and National Oil and Gas Talent Register. To appear on these two, it means that you qualify to do business in the industry even though it doesn’t necessary guarantee you business. It means you can compete with any other on these data bases.

UNOC’s Mr. Mulisa emphasizes that the time for Ugandans to participate in the oil and gas sector is now and should focus on other aspects of the sector. “Don’t focus on the oil, focus on the activities in which you can participate in to make money. This is our resource, we should participate. The laws are in place, find ways to joint venture,” he said.

Mr. Aggrey Ashaba of GCC Services says the delay to produce oil and gas has enabled Uganda to get the laws, policies and enter into partnerships and prepare well. GCC Services, a partnership of local and international investors, is involved in Engineering, Maintenance, Design and Construction of remote sites and camps for oil companies.  

Last year government operationalized the National Content Policy as a tool to facilitate how Ugandans participate in the oil and gas sector. This police is provided for in the National Oil and Gas Policy of 2008 and the subsequent petroleum Acts.

The oil and gas industry in Uganda is expected to absorb $20bn as investment in various projects a development Mr. Patrick Mweheirwe, the Managing Director of Stanbic Bank, describes as a life opportunity for Uganda to activate its economy.

“If only 30 percent of this investment can be part be spent on local entities, it would have dramatic multiplier effect on other sectors like manufacturing, agriculture, tourism, logistics and others. This will create numerous jobs and stability of dollar inflows,”

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