Cape Town — Uganda's route to first oil continues to be pushed back by delays around getting key oil projects approved, with the country's oil minister now banking on 2021 as the revised date.
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"Our initial target was first oil in 2020 but unfortunately that seems to have slipped and we are now looking at 2021," Irene Muloni said at a press briefing at Africa Oil Week in Cape Town Thursday.
Muloni was in an optimistic but pragmatic mood and said she said hopes that a final investment decision for the Lake Albert oil fields will be sought sometime in the first six months of next year.
"We are waiting for the companies to make their final investment decisions. [On the pipeline] the front ended engineering designs have been completed, we are just waiting on approval just to make sure everything is safe," she added.
The oil minister didn't specify the exact reasons why the FID was being delayed but she did concede that the ball was in the court of the oil companies - Total, CNOOC and Tullow Oil.
"I want them to take FID as soon as possible so that work can commence," she said. "If they are saying it will done in the first quarter of next year I was hoping it could be done before this year ends."
Officials from the country had talked about the FID being sanctioned earlier this year but the plans have not moved as fast has some had envisaged.
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"We have waited a long time," she said. "Let's move things very fast so that if we are to employ more groups to construct the pipeline, let's do it so we can get first oil 2021 now that we have missed the 2020 target."
Oil was discovered in Uganda 12 years ago and, with around 6.5 billion barrels of crude, Uganda has the largest unexploited oil fields in East Africa. However, pumping has been delayed amid a litany of disputes with oil companies, ranging from tax suits to development plans and that has made onlookers cautious until Uganda has fully put those issues behind it.
Uganda was initially hoping to start pumping as much as 200,000 b/d of crude soon after first oil in the last quarter of 2020, from its Lake Albert field, which could peak at 230,000 b/d in 2023, according to government estimates.
The Uganda project, led by Total, also includes China National Offshore Oil Corp. and Tullow Oil, all of which are developing some 1.7 billion barrels.
Muloni also admitted that due to delays of first oil, the Albertine Graben refinery project has also been pushed back by a year to around 2022 or 2023.
A consortium led by General Electric agreed in April to build and operate a 60,000 b/d refinery in Hoima, western Uganda. The $4 billion facility is expected to process 30,000 b/d of crude initially, before its capacity doubles during the second-phase development. The project was initially expected to come on stream by 2020.
"We have given them up to two years to make a final investment decision, one-and-a-half for the FEED and an additional half year to look for the funding, after that construction commences and then the refinery finally coming online 2022-2023," she said.
The project is dependent on the construction of an export pipeline via Tanzania, and the front engineering and design for this project was completed earlier this year.
The $3.5 billion planned export pipeline via Tanzania is expected to bring over 200,000 b/d of crude to the market from the project.
The 1,444 km pipeline traversing the two countries will be heated as Uganda will be producing light, waxy crude.
The country has also been involved in a capital gains tax row with Tullow, and Muloni said she was hopeful it would be resolved "very soon."
The tax dispute of around $900 million involving a revenue sharing plan has been one of the reasons for the delay in FID, according to sources.
Muloni also said Uganda will launch its next bidding round for oil exploration licenses in March next year.
She said the country is in the process of gathering data on the proposed licenses.
Its first licensing round took place two years ago and Australia's Armour Energy and Nigeria's Oranto Petroleum bagged a few licenses.
Uganda has around 6.5 billion barrels of crude and 500 cubic feet of gas, according to government estimates.
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