oil politics in africa conference, coventry university, united kingdom

Ministry of Energy and Mineral Development111

UGANDA’S EMERGING OIL AND GAS SECTOR,

CHALLENGES, STRATEGIES FOR SUSTAINABILITY OF THE SECTOR.

Hon. Irene Muloni (MP)Minister of Energy and Mineral Development, UGANDA

A Presentation at the A Presentation at the

Oil Politics in Africa Conference,

COVENTRY UNIVERSITY, UNITED KINGDOM

1616thth November, 2011November, 2011

Ministry of Energy and Mineral DevelopmentMinistry of Energy and Mineral Development

Introduction.Status of the oil and gas Sector.Interventions by Uganda Opportunities available in the sectorConclusions.

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PRESENTATION OUTLINE


Oil and Politics in Africa•International oil companies have intensified their search for oil and gas in Africa•From traditional oil nations like Nigeria, Angola, Egypt, Libya, Algeria, and Sudan to new entrants like Ghana, Uganda and Mozambique•If well managed, the development of Africa could be spurred by these resources•A new thinking in terms of value addition, transparency and accountability, management of expectations, national participation etc. is required

1. INTRODUCTION

Ministry of Energy and Mineral DevelopmentMinistry of Energy and Mineral Development44

• Albertine Graben sub divided into 11 Exploration Areas

• 5 Active Production Sharing Agreements (PSA)

• 3 Licensed Operators • Total and CNOOC expected to

finalize operatorship soon

Status of LicensingStatus of Licensing

2. CURRENT STATUS OF THE SECTOR


DISCOVERIES AND RESERVES

20 oil and/gas field discoveries made with 58 out of 64 wells finding oil .

Over 2.5 billion barrels of oil in the ground

About 1 billion barrels recoverable

About 40% of the Albertine Graben has been evaluated

2. CURRENT STATUS OF THE SECTOR


Government finalized a study for the refinery. The project is feasible and viable. The recommendation is to develop a 60,000 BOPD

refinery that will later be expanded to 120,000 BOPD and 180,000 BOPD.

Since the 60,000 BOPD Refinery takes 5 years to develop, the strategy is to start with a modular small refinery of 20,000 BOPD delivered within 3 years.

2. CURRENT STATUS IN THE SECTOR

Oil Refinery Development


Petroleum Exploration and Production is Governed by:

The Petroleum (Exploration and Production) Act, Cap 150, Laws of Uganda 2000

Petroleum (Exploration and Production) (Conduct of Exploration Operations) Regulations, 1993

Production Sharing Agreements (PSAs) Environment, Wildlife, Water Statutes and guidelines

Downstream aspects of the industry are Governed by Petroleum Supplies Act of 2003.

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REGULATORY FRAMEWORKREGULATORY FRAMEWORK

2. CURRENT STATUS IN THE SECTOR


Management of expectations Revenue management and sharing Employment Environment protection Commencement of production

Failure to appreciate complexity of the industry Capital intensive High risk Takes time to start getting returns Transparency should be in context of respect of contracts e.g.

confidentiality High technology industry – requiring constant training

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3. POLITICAL CHALLENGES THAT HAVE EMERGED


Competition for acreage Companies that would have wanted to farm-in but could not Companies would like to acquire new licenses

Common international border issues Prospects straddling borders Interstate infrastructure

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3. POLITICAL CHALLENGES THAT HAVE EMERGED


A National Oil and Gas Policy for Uganda was formulated and adopted in 2008 to address the issues in the emerging sector.

Policy Goal: “To use the country’s oil and gas resources to contribute to early achievement of poverty eradication and create lasting value to society” The Policy among other things recommends the revision of

present Act and Regulations to conform with the new policy directions.

The regulations will be updated to better address the development and production phases of the petroleum value chain. 10

4. INTERVENTIONS BY GOVERNMENT TO ADDRESS THE CHALLEGES


Implementation of Policy has commenced;Implementation of Policy has commenced;

Drafting of new petroleum legislation to operationalise policy is ongoing. This includes legislation for exploration, development and production. Legislation for value addition and that for

revenue management. Regulations for local content, HSE will also be done.

In-country training focusing on petroleum industry has started. This is both at technical and university level.

Value addition through refining in Uganda to be undertaken. Communication Strategy has been developed. Close monitoring of environment and biodiversity being undertaken. New institutions are being put in place. Local content study has been undertaken to ensure optimum national

participation in oil and gas activities.

4. INTERVENTIONS BY GOVERNMENT TO ADDRESS THE CHALLEGES


Joint Ventures and firm in arrangements in licences held by small independents.

Provision of Capital and expertise for the emerging infrastructure such as refining and transportation of hydrocarbon commodities and products

Service provision and contracts in the fields of Engineering, Procurement, Construction, Analytical Laboratories, Waste management, etc., for the upstream and midstream facilities.

Power generation by Independent Power Projects.

5. INVESTMENT OPPORTUNITIES IN UGANDA’S HYDROCARBON SECTOR

Ministry of Energy and Mineral Development

Good Policies embracing best practice resource and revenue management measures will ensure value for the oil resources in Africa

Measures such as national participation, capacity building, value addition, transparency and accountability, management of expectations, are pertinent.

A National Oil and Gas Policy for Uganda has been put in place to guide development of the oil and gas sector and implementation of this policy is ongoing. Legislation to guide production, utilization and revenue management being drafted.

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6. CONCLUSION

Ministry of Energy and Mineral Development

As the Sector prepares to enter development and production phases of the petroleum value chain, a concerted effort on the part of all stakeholders to maximize the opportunities and mitigate any challenges is of utmost importance.

The development of an in country refinery is one of the key aspects of implementing the policy. The country is eagerly looking forward to the development of this refinery so as to secure optimum benefit from its oil and gas resources.

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6. CONCLUSION contd

oil politics in africa conference, coventry university, united kingdom

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