The Observer (Kampala)

Uganda: Rallying Call for Regional Partnerships in Oil Sector

The discovery of commercially viable oil reserves in Uganda, coupled with ongoing oil exploration in Kenya as well as gas discoveries in Tanzania, no doubt make East Africa a new oil and gas frontier.

With intensified exploration, there is hope of even finding more oil and gas. The new discoveries have potential to lift thousands of East Africans out of poverty. Buoyed by the discoveries, petroleum experts, activists as well as politicians want East African countries to design a marshal plan-- to ensure that the resources are exploited sustainably and for the benefit of the people.

Jimmy Mugerwa, the General Manager Tullow PLC Uganda, speaking at an oil conference recently, said that the region needed to cooperate especially in terms of petroleum infrastructure. "We need an energy marshal plan as a region," Mugerwa said, stressing that the plan would help to understand which kind of infrastructure is needed in terms of roads, railways, and refineries.

Justifying the need for regional cooperation, Mugerwa said there were many issues like transport that the governments of Uganda and Kenya should work on together. With Uganda planning to build a refinery, it will require companies that will construct the refinery to import an estimated 850,000 tonnes of equipment via the port of Mombasa.

"Can the port of Mombasa handle this in addition to its usual capacity? Maybe we need another port," he suggested.

Mugerwa says the tonnes of equipment for the refinery alone also need good roads. The longest stretch of the road is in Kenya. He is afraid that the roads, especially those in Uganda, may not even handle the traffic, leave alone the weight. Paul Adong, the Managing Director, Nile Petroleum (South Sudan), said improving the handling at Mombasa port should be prioritized.

"What needs to be done is develop the port of Mombasa, modernize Lamu port and also modernize railway transport," he said.

He cited the problems South Sudan is facing, losing billions of dollars since it shut oil production last year after a disagreement with its northern neighbour --Sudan, as a good example for the need for regional cooperation.

"It is not cost-effective to litter the region with refineries. We need to agree on where to develop a refinery that is cost-effective."

Buliisa MP Stephen Mukitale Biraahwa also weighed in. "We should think of regional pipelines, refineries. We need to invest in regional seismic surveys and regional laboratories. It would be much cheaper," he said.

Robert Kasande, the refinery project manager at the Petroleum Exploration and Production Department (PEPD), says there are already collaborative efforts at a regional level.

"The heads of state summit in 2008 agreed [under the East African refining strategy] to develop a refinery in Uganda very close to oil fields to supplement on the Mombasa refinery that is inefficient" Kasande said.

That, however, appears to be hitting a dead end as Uganda looks for a private investor while Kenya tries to make its first commercial oil discovery. Uganda's refinery is expected to start producing 20,000 barrels per day before being upgraded to 180,000 barrels per day at peak. By cooperating, experts say the region will avert cross-border conflicts associated with oil and gas.

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