We must all embrace oil and gas sector

As the country gears towards first oil in 2025, stakeholders continue to share knowledge and opportunities that are critical for investors to make informed decisions.

In this interview with The Observer, Ernest Jjingo asks HUMPHREY ASIIMWE, the chief executive officer of the Uganda Chamber of Mines and Petroleum, why Ugandans should be bothered about happenings in the oil sector.

First, what is the latest update in the oil and gas sector as we speak now?

There is a lot happening at the moment. We are encouraged by the progress that oil companies are registering since the official drilling of oil wells at Tilenga started in July this year and at Kingfisher which started in January this year.

To date, the Petroleum Authority of Uganda says three wells have already been drilled at Tilenga and the first well at Kingfisher has been completed.

Remember the Uganda oil project envisions drilling over 450 wells on 35 well- pads, leading to an estimated production of 230,000 barrels of oil per day at peak once production commences.

As UCMP, we have taken bold steps to support efforts about information gathering and dissemination through spaces like our ongoing annual oil and gas media campaign. We have seen efforts geared towards strengthening links between the oil sector and other sectors of the economy such as agriculture, tourism, manufacturing, education and more.

Would you agree with people saying that all is well in the sector?

As UCMP, we are encouraged by stakeholders who are continuing to share information through media spaces, which is critical for facilitating investments in the sector.

It is about 19 months since the signing of the Final Investment Decision (FID) by TotalEnergies EP Uganda, Cnooc Uganda Limited, the Uganda National Oil Company (UNOC), and the Tanzania Petroleum Development Corporation (TPDC). The signing of FID in February of last year paved the way for investment of between $15bn - $20bn in the next three to five years.

A significant amount of this money has so far been invested in the development of the Kingfisher and Tilenga projects and the construction of the East African Crude Oil Pipeline (EACOP).

As UCMP, we are working with relevant authorities to unpack sector developments in the areas of environment, social, and governance (ESG), local content and value retention, tax and insurance, youth and women, civil society concerns, sector project updates, and more.

What outstanding issues continue to dominate the sector?

The issue of national content continues to dominate conversations in the oil and gas sector corridors, which is why all Ugandans must work towards embracing the sector and ensuring that they participate either directly or indirectly. Uganda set National Content Development targets to ensure that at least 40 per cent of the amount spent remains within the country’s economy through the use of Ugandan goods and services and by training Ugandans to do the work.

According to Petroleum Authority of Uganda, cumulatively $7.086bn has been approved and $1.762b (25 per cent) of this is for Ugandan companies over the years.

In the last five years, out of $1.3bn of the smaller procurements, $1.2bn has gone to Ugandan-owned companies (which is approx. 90 per cent). Additionally, approx. 73 per cent of the companies involved in supplying the sector have been Ugandan companies (460/624). Also approx. $988,658 has gone to the community economy through the provision of goods and services.

There seems to be an indication that key sector projects are progressing behind schedule. Isn’t this a risk for local businesses?

There is remarkable progress on all projects. I am glad that UCMP is involved in the sector and has provided spaces through which some of these updates can be shared. For instance, the drilling of wells at Tilenga and Kingfisher started, which is important.

Kabalega International Airport is over 90 per cent complete - the runway is at 99 per cent completion; the East African Crude Oil Pipeline is on course ahead of 2025.

But other projects like the refinery appear to be far behind...

What I know at the moment is that the government of Uganda is currently seeking investment partners to advance the development of the project.

PAU data indicates significant progress including the completion of the Refinery Configuration or Front-End Loading, the Front-End Engineering Design, which defines the technical design of the oil refinery, the project Environmental and Social Impact Assessment study, the logistics study, and the commercial and marketing study have all been completed. I am optimistic that the project will be delivered.

Your last words...

I see more opportunities coming our way. Current investments ahead of production are anticipated to facilitate Uganda’s GDP growth by 22 per cent and also unlock over 60,000 jobs where over 57 per cent will be given to Ugandans. As of the end of June, 12,949 people had been employed directly in the sector with Ugandans taking approx. 94 per cent of the jobs.