Ruth Nankabirwa, the minister of Energy and Mineral Development, used her second media briefing of the year to raise hope about the progress in Uganda's oil and gas industry, and allay fears over the delay in sourcing the much-needed debt for the construction of a crude oil pipeline, saying the country has entered a delicate period ahead of a major announcement from China in September.
Nankabirwa said works in the oil fields are going on smoothly - some ahead of schedule - as Uganda races to first oil sometime in 2025. She said French major TotalEnergies, the operator of the Tilenga Oil Project, had so far drilled six of the 31 well pads, with results already confirming the rich petroleum reservoir.
TotalEnergies is using three oil rigs to do the job. So far, according to a press statement, 63 of the planned 426 wells have been drilled. The Tilenga oil field, according to the Petroleum Authority of Uganda, is estimated to have a combined volume of oil in place of 5.8 billion barrels of oil, with 874 million barrels of that said to be recoverable.
Nankabirwa said some of the civil works at Tilenga's Industrial area were almost complete, especially the drilling support base and the construction camp. The Industrial area will host the Central Processing Facility (CPF), where the crude oil from the field will be sieved before being channelled into an export pipeline that will terminate at its final point in the Chongeleani peninsula in Eastern Tanzania.
Nankabirwa said construction of the CPF is at 47.8 per cent. At the Kingfisher Field Development Area (KFDA), China's Cnooc, the operators of the area, appear to be progressing well. With the lone oil rig on site, operated by COSL, nine of the eleven wells required for First Oil have been successfully drilled.
In total, 31 wells will be drilled over four well pads. The KFDA is estimated to hold a volume of 568 million barrels of oil in place, with 186 million of that amount said to recoverable. Nankabirwa said a number of civil works at the KFDA have entered the final stretch, with those under the first and second package of works such as the construction of some of the well pads and infield roads nearly complete.
Construction of the CPF at the Kingfisher is already underway, with progress standing at 30.3 per cent, according to the press statement. Land acquisition at both the Tilenga and the Kingfisher development areas is almost done. And yet, all the progress will count for
nothing if works for the 1,445km East African Crude Oil Pipeline (EACOP) drag.
The shareholders of the pipeline, which will ship about 220,000 barrels of oil per day at peak from western Uganda to Tanga, have struggled to nail down about $1.2 billion in debt financing for the project, partly because of a spirited fight by environmental activists to bury the project.
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A number of financial institutions have steered cleared of EACOP, which has been accused - without independently verifiable evidence - of having the potential to pollute the environment with its carbon emissions. The entire project cost for the EACOP is estimated at nearly $4 billion.
China has come in to plug the gap that many European bankers have left, with Nankabirwa saying that a recent meeting she had with Sinosure, a Chinese financial institution, was quite promising.
"We are now at a very delicate time. I was promised that in September, we shall seal the deal," Nankabirwa said, referring to the negotiations surrounding financing for the EACOP.
Nevertheless, works for the EACOP, especially in Tanzania, are ongoing. Nankabirwa said construction of the thermal insulation plant in Nzega district in Tanzania was completed and commissioned. Already, 500km of line pipes have been delivered in Tanzania. And in both Uganda and Tanzania, some of the main camps and pipe yards have been constructed.
