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Uganda's oil and gas sector nears key milestones as infrastructure projects advance

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Uganda's oil and gas sector nears key milestones as infrastructure projects advance
Minister Ruth Nankabirwa

The Ministry of Energy and Mineral Development reports that all critical infrastructure required for the commercialization of Uganda’s Oil and Gas sector is nearing completion.

Regarding the refinery project, Energy Minister Ruth Nankabirwa revealed that negotiations with Alpha MBM Investments LLC are close to conclusion.

Drilling continues on Total Energies' Tilenga project, with 63 out of the planned 426 oil wells successfully completed. On the Kingfisher escarpment, 9 of the 11 wells required for first oil have been successfully drilled.

The Ministry of Energy and Mineral Development confirms that key infrastructural projects for the sector are on track.

Ugandan officials anticipate that some of the country’s petroleum resources will be refined locally, while others will be transported through the East African Crude Oil Pipeline. The Ministry of Energy is confident that the refinery will be operational by the time of the first oil production in 2025.

“In December 2023, the Government signed a Memorandum of Understanding (MOU) with Alpha MBM Investments LLC from the UAE for the development of Uganda's refinery,” Nankabirwa stated.

She added, “Negotiations for the key commercial agreements, including the Implementation, Crude Oil Supply, and Shareholders Agreements between the Government and Alpha MBM Investments LLC, began in January 2024 and are currently ongoing.”

Once these agreements are finalized, the consortium is expected to promptly begin project implementation.

“These efforts are crucial for Uganda's ambitions to boost oil production, drive economic growth, and generate significant national revenue,” Nankabirwa emphasized.

Contracts valued at US$ 5 billion have been awarded for the Tilenga, Kingfisher, and EACOP projects, out of the US$ 7.2 billion approved by the Petroleum Authority of Uganda. Notably, US$ 2 billion—representing 41% of the total contracts awarded—has been allocated to Ugandan companies.

The sector directly employed 14,451 people, of whom 13,048 (90%) are Ugandans.

Following a policy shift to direct importation of fuel, Uganda has switched to using the Tanzanian route, raising concerns about potential increases in pump prices. Although petroleum prices are influenced by global market conditions, the Ministry believes that local pump prices will decline in the medium term if Oil Marketing Companies exercise fair pricing.

“The first cargo of UNOC petroleum products was received on the vessel MT Martinez with 58,330 metric tons of petrol, and another vessel, Sinbad, was received carrying 79,968 metric tons of diesel between 2nd July and 4th July 2024.”

The Ministry reiterated that while pump prices are linked to global market conditions, a decline in local prices is expected in the medium term.

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