Uganda’s oil exploration is on course with a proper commercialisation plan – government

March 21, 2024

The State House Investors Protection Unit Head, Col. Edith Nakalema has assured Ugandans that the government is committed to ensuring that the target of producing the first oil in 2025 is achieved.

“Government is not only committed to deliver the first oil but it is also looking forward to ensuring that the interests of Ugandans are projected so that they benefit from the oil,” she said.

Col. Nakalema made the remarks today during a joint media briefing with the Uganda National Oil Company (UNOC) held at the State House Investors Protection Unit Offices in Kampala.

She explained that as the unit, they are mandated to project every investment in the country including those in the oil and gas sector.

“Every investment should be protected to ensure steady progress of our motherland,” Col. Nakalema emphasised.

On her part, the UNOC’s Chief Executive Officer, Ms. Proscovia Nabbanja assured Ugandans that the country’s oil and gas sector is progressing well.

“A lot of work has been done and we should be able to meet the deadline of the first oil production come 2025,” Ms. Nabbanja said.

Ms. Nabbanja also clarified that the overall function of UNOC is to handle the Government of Uganda’s commercial interests in the petroleum sector and to ensure that the resource is exploited in a sustainable manner.

“Uganda’s confirmed petroleum resource base is currently estimated at 6.5 billion barrels of Stock Tank Oil-Initially-In-Place (STOIIP). Of this, between 1.4 to 1.7 billion barrels are estimated to be recoverable. Currently, only 40 percent of the Albertine Graben is licensed,” she said.

The CEO further disclosed that the government has already set up a commercialization plan that will ensure sustainability of petroleum production in the country.

The commercialisation plan involves the setup of the East African Crude Oil Pipeline (EACOP), the Kabalega Industrial Park and the Uganda Oil Refinery at Kabaale, Hoima District.

“The commercialisation plan for Uganda’s oil and gas resources is two-fold; a 60,000 barrel per day refinery and the EACOP, which will deliver crude oil to the international market,” she noted.

“The Kabalega Industrial Park is among UNOC’s key midstream projects. UNOC through the Uganda Refinery Holding Company leads its development, operationalization and management with a 51 percent shareholding. Its economic benefits include adding up USD 4.9 bn per annum to national GDP, creating a fiscal impact of USD 1.2 bn per annum and creating 35,000 job opportunities.”

On the other hand, Ms. Nabbanja asserted that UNOC solely operates the Jinja Storage Terminal, a 30-million-litre refined petroleum products storage facility in Jinja.

“Jinja Storage Terminal is a bonded storage facility that stores fuel for oil marketing companies to clients and keeps government strategic stock to ensure security of petroleum supplies,” she disclosed.

She also said that the government is developing another storage terminal in Namwabula, Mpigi and it will serve as a storage facility for both the government strategic reserves and provide fuel storage for oil marketing companies.

Sole Importation of Petroleum products:

Ms. Nabbanja informed the media that following the enactment of the Petroleum Supply (Amendment) Act, 2023, UNOC acquired the sole importation status in December 2023 and it will source petroleum products from the international Market and supply the oil marketing companies.

“The move is meant to ensure security of supply, ultimately reversing the past trend of price hikes triggered by shortages. It also eliminates middlemen whose margins affect prices.”

Ms. Nabbanja reassured Ugandans that the EACOP project as well as other oil and gas projects are being developed in accordance with the internationally accepted standards for managing environmental and social impacts.

“There are many socio-economic benefits from the oil and gas sector such as infrastructure development, improved welfare, skills transfer and employment.”