OMUNYORO NO MUYOROKATI BINU BAW’OBIMANYIRE??

Tullow Oil has deferred Uganda’s first oil production to 2012 citing infrastructure challenges, the long tax dispute that held back progress through last year, as well as the waxy nature of Uganda’s crude oil.
Tullow Uganda bossBrian Glover said there is need for regional partnerships with countries which have access to the sea especially as far as tra…nsportation of the oil is concerned.

Before Uganda discovered commercial oil reserves, Kenya and Uganda awarded a US$72 million contract to Libyan firm Tamoil East Africa to extend the oil pipeline from Eldoret to Kampala to bring oil products to Uganda, but there has been very little progress on the pipeline.
Unlike Ghana, which began production on December 15, 2010, Uganda’s waxy oil requires different production technologies and systems.

“Uganda has a very different type of crude oil and we have to be careful how we can get the oil without damaging it,” Mr. David Mooney, Tullow Oil’s Group Supply Chain Manager, told the East African Business Week in an interview last week.

“Ghana’s offshore deep water exploration and production is a different type of crude. It is very liquid and flows very easily. In Uganda, it is heavy waxy crude. It is not liquid until it is heated up to 50 degrees”.
Mooney cited infrastructure (a refinery, roads), the environment and market place where the oil will be sold as factors to be considered before production actually starts.”We have to plan properly and we have to take a number of things into consideration,” he said.

As it prepares for the next phase of oil development, Tullow Oil invited a combination of local and international companies to an inaugural logistics suppliers open day on January in Kampala.

The event was meant to inform logistics companies about supplier opportunities available through Tullow Oil as well as exploring how logistics companies can be involved in providing services required to support Tullow’s operations in the Lake Albert basin. According to Tullow Oil’s logistics manager, Christian Amdt, over 550 local and international companies will be expected to participate in the Lake Albert production exercise.

Amdt said depending on the number of services that the production project will provide and need, the big numbers were relevant in the exercise.
Simon D’ Ujanga, Uganda’s minister of state for energy, said the reason for involving mainly foreign expatriates is to transfer skills into the country, which the locals can easily adapt.

“There will be transfer of skills and technology into the country and Ugandans will be equipped with skills required for the sector through formal and industrial training,” D’Ujanga said.

Tullow Oil Country Manager, Mr. Brian Glover, said Tullow’s investment in the country will increase to about $10b over the next decade, making it the region’s biggest investment project. The company has already spent $800m in exploration Glover said Tullow had explored 37 wells in the country, of which 36 were found to be viable.

“Let’s just be aware of the fact that oil production will have started after a very short period of time after the oil will have been first discovered. Exactly when that’s going to be, we’ll have to look very carefully, but I think 2012 is a good time,” Glover said.

Tullow is the largest exploration company operating in Uganda’s Lake Albert basin, which is estimated to contain roughly 2.5 billion barrels of oil. Tullow has so far discovered 1 billion barrels of recoverable oil, with another 1.5 billion yet to be found.The largest Irish company on the Dublin stock exchange had planned to begin production in the final quarter of this year, but a long-running dispute with both the government and Tullow’s former partner, Heritage Oil, appears to have delayed that target. Tullow paid about $1.5b in July 2010 to Heritage Oil for its interests in the Lake Albert basin.

In the deal, Heritage paid $121m in an escrow account pending the resolution of the dispute and the balance would only be paid if the arbitrators ruled in Uganda’s favour. As a result, Uganda has delayed final approval of the purchase of the stakes until the matter is finalised. But the chairman Tullow Uganda Operations, Mr. Elly Karuhanga, said the tax dispute between the government and the oil exploration companies, has been resolved.

The Lake Albert programme dates back to 1986 when it was decided to carry out meaningful oil exploration in the country.
The tax dispute also dampened efforts Tullow was making to acquire two large oil development partners.

At the time the tax dispute came to the fore, Tullow was working to bring on board France’s Total AS and the China National Offshore Oil Corporation (CNOOC) as partners in a 33.3% ownership arrangement to develop the country’s oil industry.

With a refinery planned by the Uganda government and the likes of Tullow in place, Uganda will have the potential to reach production capacity of 200,000 barrels of oil per day (bopd). This would place Uganda in the top 50 biggest producers in the world and among top 10 in Africa.