Eight years later, a Memorandum of Understanding [MoU] between the government and Joint Venture partners, including
Before then, venture partners, though tongue-tied, had been concerned over the pace of government's conduct of business, with the civil society urging the government to borrow a leaf from the
The MoU, signed mid last week by the Energy minister Irene Muloni and executives from the oil companies, details a commercial route-to-market structure for the country's oil resources.
Industry analysts say the three partners are in line with the terms of the Production Sharing Agreement (PSAs) and are in the process of conceptualising engineering values and investment modules for both upstream [development of oil fields] and midstream projects [pipeline, refinery, power plant among others].
The mismatch However, there seems to be a mismatch in relation to the overall investment needed to implement the MoU, according to details obtained from oil companies and the government.
Whereas government says it would need between
The latest commercialisation plan is based on the current recoverable reserves estimated at 1.7 billion barrels from the 3.5 billion barrels discovered to-date.Whatever the final cost, the projects that will eat into the investment include a Greenfield oil refinery, a crude export pipeline from Hoima to Lamu in
Some of the projects, like the refinery, are largely a government undertaking and oil companies remain jittery about such investments.
However, Ms Muloni says the MoU will propel and support such projects but she does not go into details on how this will be done.
The current foreign direct investments in
Mr Loic Laurandel, the Total general manager, last week raised concerns over the mode of financing the above listed projects within three years, when oil production is expected to start.
His concerns have so far not yielded direct response from the other two partners or even government, which industry players say might push the production date further. It is expected that by 2018,
What next?The MoU, which was held back by protracted haggling on the arbitration clause, had been anticipated to be the long awaited instrument to start production but as things look, there is still a long way to go.
The implementation of the MoU has to go through other steps like harmonisation of the fiscal regime for the oil industry and appliance of
Oil companies currently bear the entire share costs [of exploration, development and production], and have become wearily but with future prospects of recouping more on investment.
According to Mr
Cutting oil importsWhen achieved
The imports cost
However, with government expecting to export to neighbouring countries, a section of the population is concerned whether the production pace will be able to match other countries demands or even withstand global market dynamics.With optimism of global oil prices steadily moving upwards - currently a barrel at
It should be noted that the project might not be short of finances, as said by Mr
During a media briefing last week,
The company was the first to be awarded a production licence for the
The FEED which will be conducted in two phases, according to the government, allows for a 2017 first oil production, which covers cost estimates [production], layout of well pads, production and water injection, development of drilling mechanisms and establishment of a central processing plant with up to 20,000 barrels-per-day.
Tit bits on
Awaiting production licences: As Tullow and Total wait to receive production licences, plans to construct a midsize
Refinery land secured: A landscape of 29 square kilometers in Kabaale Parish in
Phased refinery: The refinery will be developed in two phases, starting with 30,000 barrels per day "to allow oil production" but another subsequent phase will be added by 2020.
What production delays mean: The shift in production dates is likely to expose
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