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Oil and Gas

President Museveni’s 2011 Statement on Oil in Uganda


President Museveni in the State of the Nation Address, June 7, 2011

 

I am further pleased to report that exploration drilling was extended to Kihiihi-Kanungu areas in Exploration Area 4B in 2010.  Currently, the appraisal of the fields in Exploration Areas 1 (Pakwach Basin) and Exploration Area 2 (Butiaba-Wanseko area) is in progress. A final evaluation of oil reserves using 3D seismic survey and appraisal drilling is in progress. Once completed, the development phase of creating infrastructure, like pipelines and oil-processing plants, will follow and will in turn lead to the start of oil production in the country.

The feasibility study Government has undertaken for the development of a refinery in Uganda, has revealed that the refinery project is both technically and financially viable.  Consequently, Government has commenced development of a refinery as a project of three to five years. Government is fast-tracking the construction of the refinery to process crude oil from the Albertine Graben. While this is a medium-term measure, it will ensure that the vagaries arising from being supplied with fuel from far afield are mitigated. It will also allow the building of larger fuel reserves than those held by oil companies today; to deal with any shocks that may arise in supply.

English: Yoweri Kaguta Museveni.

English: Yoweri Kaguta Museveni. (Photo credit: Wikipedia)

Madam Speaker and Honourable Members, in 2010 petroleum and other fuel products supply was generally smooth, except for the month of September when erratic supplies of petrol were experienced.  However, the situation has significantly changed since the beginning of this year, mainly because the demand for oil internationally, regionally and locally has continued to grow, surpassing supply.

As an illustration, here at home, statistical data from the Ministry of Energy and Mineral Development for February and March, 2011 indicates that while PMS (Petrol) requirements for the month of March, 2011 were 32,832,900 litres, only 22,381,247 litres were supplied, leaving a deficit of 32%.     Projected AGO (Diesel) requirements for March 2011 were 76,556,500 litres but only 40,722,383 litres were supplied, leaving a deficit of 47%.

Madam Speaker, it is irresponsible and unpatriotic for some leaders to mislead the public that fuel prices in Uganda are the highest in the Region.  In our Region, comparable fuel prices in the month of April were as follows:

Petrol Diesel
Uganda Shs. 3,500 Shs. 3,000
Kenya K. Shs. 112
(Ug. Shs. 3,192)
K.Shs 110
(Ug. Shs.3,135)
Rwanda R. Fr. 1015
(Ug. Shs 3,857)
R. Fr. 1015
(Ug. Shs. 3,857)
Tanzania T. Shs. 2006
(Ug. Shs. 3,210)
T. Shs. 2000
(Ug. Shs. 3,200)
Southern Sudan S. Pound 4.5
(Ug. Shs. 3063)
S. Pound 3
(Ug. Shs. 2040)

Notwithstanding the discomforting prices, the following positive developments are worth mentioning. First, the Jinja Storage Tanks with a capacity of 30 million litres as national strategic fuel reserves, are being refurbished and restocked under a Public-Private Partnership initiative.  Furthermore, in order to ensure availability of petroleum products in the country, all oil marketing companies are required to maintain stocks of up to 10 working days.

Secondly, in line with the Petroleum Supply General Regulations, 2009, Government issued new guidelines for licensing of operators in the petroleum sector regarding compliance with Health, Safety and Environmental Regulations. These ensure the systematic development of petroleum marketing facilities in the country. Last but not least, as a result of efforts towards quality and standards monitoring, non-compliance levels reduced from 29% in 2009 to 4.2% in 2010.

President Museveni in New Year 2011 Address to the Nation on December 31, 2010

 

With the prospect of large oil revenues, Uganda will soon be free from external influence in the implementation of our investment programs.
There are those who write fiction about Uganda’s oil, theorizing that it will be a curse. Those kind of people are simply telling lies. The NRM Government has moved to improve the regulatory environment of the sector to ensure that Government achieves maximum benefit from these resources. The NRM plan of development of the petroleum sector will continue along the strategies and actions defined in the National Oil and Gas Policy.

The key features of these strategies are as follows:

 

a)    The NRM Government will pass a new legislation governing access to oil and gas rights, regulation of exploration and production, refining and gas processing, environmental management as well as the management of petroleum revenues.  Furthermore, institutions to effectively take the sector forward like the Petroleum Regulatory Authority to regulate the sector, as well as the National Oil and Gas Company to participate in the business aspects will be put in place.
b)    In the medium term, the NRM Government will develop a refinery in the country on a public-private partnership basis to add value to the oil.  This refinery, which will be located in Hoima district, will be developed in a phased manner.
c)    Capacity building in the oil and gas sector will continue with a view of producing the required manpower for the sector.  This will be through the expansion of the Uganda Petroleum Institute at Kigumba to produce initially artisan and technical level personnel for the industry followed by professional levels.  Graduates in the petroleum sciences and relevant disciplines will also be produced in courses which have begun at Makerere University and other private universities in the country.  These trained Ugandans will take up the over 20,000 jobs directly generated by the oil industry together with the additional 100,000 jobs generated as a result of the multiplier effect.
d)    To ensure an investor-friendly environment to facilitate continued attraction of investments to this sector  in exploration, complete appraisal of the discovered oil and gas fields is being done; licensing rounds will be undertaken to facilitate open and competitive licensing for the areas with petroleum potential in the country which are not yet licensed.
e)    The fourteen oil and one gas discoveries which have been made in the country will continue to be appraised with a view of establishing their extent and production capacities.
f)    Shall invest in the generation of electricity from gas starting with the Nzizi field which has an estimated capacity to generate 50MW-80MW of electricity.
g)    The NRM Government will promote the establishment of energy and oil based industries like iron and steel, plastics, pharmaceuticals and fertilizers, among others. The oil and gas sector will continue to contribute a growing number of employment opportunities and the industrialization agenda.
h)    Promote environmental and social responsibility in the Oil and Gas sector.
i)    A Petroleum Fund will be put in place to ensure that oil revenues are well managed.
j)    Furthermore, the NRM Government will ensure that benefits arising out of oil production like royalties benefit all stakeholders in the country through investment in infrastructure, human resource development and scientific research and development.
k)    Physical planning will be under taken in the oil producing areas as a matter of priority with emphasis on Municipalities and other towns in the region.

President Museveni in the State of the Nation Address, June 2, 2010

 

Mr. Speaker, I reiterate our stand that given our commitment to value addition, commercial developments will be in refining the oil and processing gas within the country.  In the short term, however, the discovered gas resources together with test crude produced during appraisal will be used to generate electricity to help meet the country’s electricity needs.

Mr. Speaker, so far, Uganda has not exported any drop of its discovered oil. I, therefore, appeal to those who have been peddling lies that oil is already being secretly sold abroad, to stop those unfounded accusations, which have the potential to incite violence.

President Museveni in the Address to the National Executive Committee of his party, the National Resistance Movement, on January 12, 2010
Nevertheless, our newly discovered Petroleum will give us readier cash with which we shall be able to tackle the more durable potential of Uganda’s industry, agriculture, services and human resource development. The oil money will be used to expand infrastructure, especially electricity generation, some aspects of road infrastructure and the railway; some aspects of higher science education as well as a vast network of vocational training; irrigation and scientific research. Our oil money will be ring-fenced for these six purposes. Oil money should never be used to pay wages – should never be used for recurrent expenditure or to support consumption.  It should be used to create a higher capacity.

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