Uganda’s long serving president, Yoweri Kaguta Museveni, has said the East African country will ‘start pumping out our oil’ in 2020, momentarily answering the question of when the country will start extracting its natural resource. Uganda boasts of 6.5 billion barrels of proven oil reserves waiting for extraction in the Albertine Graben, western Uganda.
The president made the disclosure in his speech during the reading of the National Budget for the Financial Year 2016-2017 at Serena Hotel in Kampala. The Shs26 trillion budget was read to the nation by the Minister of Finance, Planning and Economic Development Matia Kasaija, MP for Buyanja County in Kibale district.
Earlier projections had named 2018 as the year wountry will start producing her oil, a deadline which has not been achieved considering that the country has not put in place needed infrastructures to enable production of oil. The country has however made key milestones in regard to this subject.
The 71 year old president confirmed that the country will be ready in 2020. Not even the low global prizes of oil could worry him saying that even at the low price of US$50 per barrel the country can make $3bn per year after selling 200,000 barrels per day. This money, he said, can enable the country deal with the issues of funding scientific innovations, manufacturing, agriculture and other key sectors leading to development.
“By 2020, we shall start pumping out our oil. Even at the low price of US$50 per barrel, if we shall be pumping 30,000 barrels per day for the refinery and 170,000 barrels per day for the pipeline and the total will be 200,000 barrels per day that will give us an additional income of US$3 billions per year.
The Government portion of that money will be US$2.1billions which is 70%. With that additional money, we shall be able to easily deal with the issue of funding innovation by our scientists, capitalizing the Uganda Development Bank (UDB) so as to support the manufacturing activities as well as some aspects of agriculture, capitalize the National Housing Finance Bank so as to enable them to fund low cost housing for the people, fund some elements of the infrastructure, etc. etc.” he stated in his speech.
In April Uganda and Tanzania agreed to construct a $4m crude oil export pipeline to carry crude from Hoima in western Uganda to the Tanzanian port of Tanga. French Oil Company Total SA is willing to fund the construction of the infrastructure. A similar pipeline from a refinery in Hoima to Kampala is also going to be built to transport refined products to the local and regional market.
A consortium led by RT Global Resources (also including Telconet Capital Limited Partnership, VTB Capital, JSC Tatneft, and the GS Engineering and Construction Corporation) won the bid to build the refinery. The final details are being discussed and the construction to tee off in Kabaale, Hoima district.
Construction of the pipeline to Tanga might take two years while a similar time might be needed to construct a refinery if constructions starts now. Further delays will mean that the country might not be ready for the first oil in 2020. A fleet of other ‘small’ infrastructure projects including an airport and roads are yet to be put in place in the oil fields.
Oil companies have also expressed discomfort over the delay to issue them with production licenses. Only CNOOC has received a production license. Total and Tullow are yet to get theirs. Government is also working on installing a full-fledged National Oil Company and Petroleum. The government institutions are currently recruiting support staff members despite being inaugurated last year.
Considering the snail speed at which government has been conducting oil business over the years, people knowledgeable about the oil business believe the 2020 target will be missed something they say is not good especially to the oil companies who need to start seeing results on their investments.
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