The Observer (Kampala)

25 November 2012

Ugandan Firms to Bid for Oil Licences

  As the oil bill gets closer to being passed into law, Civil society organizations have joined members of parliament who are against the ... ( Resource: Civil Society to Demonstrate Over Oil Bill in Uganda

Ugandan companies are among those in a long line of investors waiting to bid for oil exploration licences when government finally issues a new round of licensing sometime early next year, according to the ministry of Energy and Mineral Development.

Locally incorporated companies, some owned by Ugandans, have already expressed interest to bid for exploration acreage in the oil-rich region of western Uganda - a bold venture into a playfield that many feel is a preserve for international oil majors.

According to the ministry of Energy and Mineral Development performance report 2011/2012, at least seven Ugandan firms have so far expressed interest in exploration, refinery development and other services.

These are: Asker Investments Ltd, Canaan Investments Ltd, TRC Group, Nile Valley Oil Exploration Plc, Saipem (U) Ltd, Schenker oil and gas services Ltd and Intex Construction. "The ministry urges them to participate, in the future licensing rounds that would be launched once the new regulatory framework for the sector is in place," the report reads.

At least, 14,000 square kilometres - roughly 60% of the oil-rich Albertine graben - remain unlicensed, the report notes. According to the report, a total of 18 companies have already expressed interest in the petroleum industry, especially in the midstream works of the oil infrastructure development.

The international companies that have so far expressed interest are: China Petroleum Engineering and Construction Company (China), Rapid African Energy (South Africa), Sinopec (China), , Marubeni (Japan), Pet Oil (Turkey), Turner And Townsend (South Africa), Whitanker Group (USA), Bain and Company (USA, India), Trans-Oceanic Projects and Developments (Kenya) and Toyota (Kenya), among others.

In addition, sources within the ministry reveal that international oil giants likes the Royal Dutch Shell, BP and ExxonMobil are also eying Uganda's nascent petroleum industry after the geographical risks of finding oil in the Albertine graben have been substantially reduced.

In February this year, two of the international giants China's CNOOC and France's Total entered Uganda's oil industry. Total E&P has since revealed that it will be bidding for more exploration acreage once government calls for a new round of licensing in the Albertine graben.

"Total will be interested to acquire more exploration areas," Loic Laurandel, the General Manager, stressed in October.

Bukenya Matovu, the minister of Energy and Mineral Development spokesperson, told The Observer, that indeed, some Ugandan firms are among the companies that have expressed interest to apply for exploration licences.

"Yes, they have just expressed interest to apply for exploration acreage, but we are yet to take them serious," Matovu said.

Matovu says the upstream and midstream activities in Uganda's oil industry require heavy financial investment and highly-skilled technical ability, which Ugandan companies might not have. "Do you believe that there is a Ugandan company with capacity to undertake oil exploration? They are just frontline companies," Matovu said.

Matovu said some of these Ugandan companies might be incorporated here, but shareholders might not be Ugandans. Alternatively, Matovu reasons, some companies want to use their influence, acquire exploration licenses and sell their interests to competent multinational companies, for a profit.

Government plans to lift a moratorium on issuing new licences for oil exploration next financial year after the two petroleum bills have been passed into law. Michael Werikhe, the chairperson of Natural Resources committee of parliament, hopes that the bills, currently in parliament, will be passed before the end of the year.

Government suspended the issuance of new exploration licences until new legislation to regulate the sector was in place. The bills, once passed into law, are expected to usher in competitive bidding as opposed to previous open -door licensing.

According to the ministry of Energy 2013/2014 strategic plan agreed on in the recent sector review, government, in the next financial year, plans to conduct geological, geophysical and geochemical data surveys in areas outside the graben with a view of establishing whether there are other areas with a working petroleum system.

In the next financial year, government also plans to establish all the petroleum-related institutions provided for in the bills. These are: the National Oil Company, Petroleum Directorate and the Petroleum Authority of Uganda. Government also intends to award production licences, develop national content, hire a special -purpose vehicle for the refinery, identify a developer for oil refinery and complete the acquisition of land for the oil refinery.

Government is also preparing a comprehensive study on the skills requirement for the entire value chain of the petroleum sector.

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