Uganda oil refinery not negotiable

Tullow Oil, one of the two main companies exploring oil in Uganda
announced last week yet another promising find- likely to support its
arguments that Uganda should postpone its early production scheme
[EPS] and focus on a large plant in the future.
The company and government have shelved plans for producing light and
heavy diesel as well as kerosene from a small production unit which
was meant to start this year.
However both company and government sources have said there needs to
be consensus on whether Uganda should refine its oil here or export it
as crude before a decision is taken.
Tullow has also argued that rather than invest in a small plant for
early production the government is better advised to put its money to
use on an appropriately sized plant that takes into account the full
extent of its oil assets.
“ Uganda wants a refinery and that’s non-negotiable” said Hon. Steven
Mukitale [Buliisa MP] who chairs the natural resources committee and
sits on the committee on natural resources.
In an interview yesterday Mukitale said while the debate continues on
what framework best supports Uganda’s desire to refine its own oil it
was no longer debatable that the country had enough reserves to
support a large refinery.
“ These discoveries of over 2 billion barrels of oil will no doubt
help reassure financiers” he said.
On its website last week Tullow said fresh discoveries at Nsoga 1
Exploration Well give a green light that other wells planned in the
Butiaba area will continue the trend of successes the company has
encountered.
“This successful drilling de-risks other nearby prospects which are
scheduled for drilling later this year” said Augus McCoss, the
company’s director for exploration.
Earlier this year Brian Glover Tullow’s country manager told Daily
Monitor the company’s planning was meant to “increase production
capacity” on the back of irreversible success in oil discoveries.
Current estimates for revenues from Uganda’s oil discoveries once they
go commercial are approximately 2 to 5 billion dollars annually-
according to Tullow, several times the country’s export earnings.
However until a resolution on whether or not to refine Ugandan oil
locally or export it crude is arrived at- future realities are bound
to remain just that say industry sources.
Government and company officials are looking at current market
conditions including the price of oil and cost of borrowed money. One
of the issues being problematised is whether Tullow and other
exploration companies will sell their interest to larger firms capable
of raising cash to invest in refining capacity locally.
Tullow according to the Irish financial press has already snubbed an
approach from giant state supported Chinese oil companies.

submitted to the Daily Monitor