Unlike past conferences where deliberations revolved around preparation in anticipation of the development phase in Uganda’s budding oil and gas industry, the Uganda Chamber of Mines and Petroleum (UCMP) 8th Annual Oil and Gas Convention that ended on Wednesday 13, 2022 at the Serena Kampala Hotel was dominated discussions on the actual business opportunities that have emerged since the taking of the Final Investment Decision (FID) on February 1, 2022.
The Uganda Chamber of Mines and Petroleum (UCMP) is a not-for-profit, member-based voluntary organization that represents the interests of private players in the mining and petroleum sectors in Uganda by collaborating with the state to develop the country’s extractive sector.
Delegates at the two day event, held under the theme ‘Maximizing National Content and Value Retention’, got a feel of the various prospects available as developments of the Tilenga and Kingfisher oil fields and the 1,445 km East African Crude Oil Pipeline (EACOP) begin to take shape.
At least $15 billion is expected to be spent in getting Uganda’s oil industry to the commercial production stage by 2025.
Already, contracts worth over $600 million out of the $3.9 billion for the Tilenga and Kingfisher projects that have been committed to Ugandan companies, according to the Petroleum Authority of Uganda (PAU).
These include the Mota Engil-Uganda civil works’ contract to prepare over 700 acres of industrial area for TotalEnergies EP, Uganda’s Tilenga project to host different facilities like the Central Processing facility (CPF), construction camps, drilling support bases and operation support bases.
For the Kingfisher project under CNOOC Uganda, the civil works, well pads and access roads construction contract is being executed by Excel Construction, also a Ugandan company.
Other local companies like Beta Projects, Future Options Consulting, BTS Clearing &
Forwarding Ltd, GCC, Zoramu Consulting Group, SKYZ, Bemuga, Q-Sourcing , Threeways Shipping Services and True North are also executing various contracts under Joint Ventures with foreign firms.
“The theme of the event ‘Maximizing National Content and Value Retention’ was perfect considering the timing. It is important that we have as many Ugandans as possible participating in this massive opportunity of a lifetime. We have had close to 1000 people attending physically on both days and many more were following proceedings on YouTube and TV. So I believe we have achieved our objective,” said Patrick Mweheire, the UCMP Chairman who is also the regional chief executive for the Standard Bank Group for Eastern Africa.
Mweheire also hailed the “amazing level of transparency” from the international oil companies (IOCs) and contractors who he said shared very useful information at the convention (that will also be uploaded onto the UCMP website www.ucmp.ug and on the UCMP’s YouTube channel)
“At least everyone now knows what opportunities are available and which ones have already been given out. About $4 billion worth of contracts have been awarded already but since these are $15 to $20 billion projects, there is still much more to come. So our call to Ugandans is to use this information diligently and prepare adequately so that they win themselves these contracts,” he added.
Earnest Rubondo, the Executive Director PAU said 28% ($980m) was retained incountry from the $ 3.5 billion total investment during the first exploration phase. Another 37% ($172m) was retained in-country between 2017 and 2020 from a total investment of $462m.
It is hoped that about $5 billion will be retained in Uganda during the development phase.
“If the linkages between the oil sector and the different sectors like agriculture, health, transport, housing, tourism and civil works are properly harnessed, the economy will retain an additional $8 billion,” Rubondo added.
Hon Ruth Nankabirwa, the Minister of Energy and Mineral Development said at least 4500 Ugandans had been skilled to work in the oil sector following a collaboration with over 120 institutions. The Government of Uganda was also putting together a Local Content Development Fund to enable more Ugandans pursue oil and gas business opportunities, she added.
Both Mweheire and Philippe Groueix, the General Manager TotalEnergies EP, Uganda spoke out against the negative reports against the oil projects insisting that all the Environmental, Social, and Governance (ESG) criteria is being followed to the dot.
The convention was organized by the UCMP in partnership with the Ministry of Energy and Mineral Development and with support from Stanbic Bank, Equity Bank, TotalEnergies EP Uganda, CNOOC Uganda and the Uganda National Oil Company (UNOC) among others.
Other Highlights
- Hon Ruth Nankabirwa the Minister of Energy and Mineral Development hailed the UCMP and its partners for putting together yet another summit of international standards – this time, at no cost to the attendees
- The convention also had the Tier 01 contractors McDermott and Sinopec holding their first supplier development workshops – a regulatory requirement. The two manage the main Engineering Procurement Supply Construction and Commissioning (EPSCC) contract for Tilenga oil fields
- It emerged that most of the Uganda Revenue Authority’s (URA) tax exemptions towards the oil and gas sector applied to the licensee i.e. the International Oil Companies (IOCs) and Tier 01 contractors
- The contracting process is mainly being done through a three Tier system; where the licensee commissions the main or Tier 01 contractor; who then subcontracts a Tier 02 contractor. The Tier 02 contractor will at times commission Tier 03 subcontractors
- The majority of Ugandan companies are expected to provide goods and services as Tier
02 or Tier 03 contractors; hence the discomfort with the tax regime
- Anne Juuko, MD & CEO, Stanbic Bank Uganda said the Bank would sponsor monthly half day workshops in collaboration with the UCMP to address these emerging issues; starting with one on Taxation
- Dr James Mwangi, Group MD & Group CEO of Equity Group Holdings Plc, promised $6 billion to businesses seeking financing to engage in the emerging opportunities in the oil and gas sectors in the region and beyond. He called it the African Recovery and Resilient Plan. It is backed by 16 development banks from across the globe