In a race to first oil, Uganda and its partners have made tremendous progress in the development of the oil and gas sector.
The latest report on the ongoing developments has highlighted that a total of 93 oil wells of the 170 needed for first oil (Four Quarter of 2025) have been successfully drilled.
This implies that so far, 54.7% of the oil wells needed for the first oil are ready for production.
In addition, the successfully drilled oil wells mean that indeed there are commercially viable crude oil resources in the wells.
Of the 93 oil wells drilled so far, the November 7 report by the Petroleum Authority of Uganda (PAU), the sector regulator, indicates that 12 of the successfully drilled oil wells are under the Kingfisher development project, whereas 81 are under the Tilenga project.
China National Offshore Oil Corporation (CNOOC) is the lead developer for the Kingfisher project, whereas TotalEnergies Exploration and Production Uganda (TEPU) is the lead entity for the Tilenga project.
KINGFISHER HITS TARGET WELLS
Under the Kingfisher oil development project, they have successfully drilled the muchneeded oil wells for the first oil.
According to a preliminary progress report, so far, a total of 12 oil wells, under the Kingfisher project, have been successfully drilled.
Of these, five oil wells were drilled under Well Pad 1, three under Well Pad 2 and four under Well Pad 3?.
To successfully drill an oil well, it implies that the team confirmed that the wells indeed have commercially viable crude for production.
It should be noted that only 11 oil wells were needed for the first oil, under the Kingfisher Project. This implies that the team has already hit the targets ahead of time.
According to sources, the team will continue to conduct drilling operations and prepare more oil wells for production.
As part of the ongoing works for the Kingfisher project, the construction of the Central Processing Facility (CPF), which will separate crude oil with water and gas, is moving on well.
Currently, the progress report indicates that the construction of the Kingfisher CPF is at 48.8% completion.
The teams continue to rigorously monitor and evaluate the progress to ensure timelines are met, while maintaining safety and quality standards.
With the current progress, the report indicates that the Kingfisher CPF work is projected to be concluded, according to the timelines and aligning with the first oil target.
Now, installation of the feeder pipeline from the Kingfisher CPF to the Kabalega Industrial Park in Hoima is progressing on schedule, with approximately 47km of the feeder liner network successfully buried.
The Kingfisher project, located in Kikuube district, involves the production of 40,000 barrels of crude oil per day from 31 oil wells.
81 TILENGA WELLS READY
By October 24, the status report indicated that TotalEnergies had successfully drilled a total of 81 oil wells, out of the 159 wells needed for the first oil.
This implies that in just two months, the TEPU has successfully drilled 18 more oil wells.
Even at the Tilenga Industrial Area in Buliisa district, the progress report indicates that works are ongoing smoothly.
These consist of erecting the main pipe racks, construction of equipment and tank foundations, building construction, including electrical installations and finishes, as well as installation of equipment such as heat exchangers.
In addition, the construction of flowlines (pipelines) that will deliver oil from the South Nile is also moving steadily with activities, such as stringing, welding of pipes, lowering the pipes and backfilling underway.
Relatedly, the drilling of the required holes to connect the Jobi-Rii field to the CPF located in the South Nile is ongoing.
The Tilenga project consists of six onshore oilfields,including one in the Murchison Falls National Park (MNFP), north of the River Nile and five others in the south of the Nile (outside the park).
A total of 426 oil wells on 31 well pads will be drilled in an over-five-year period under the Tilenga Project.
The crude from these wells will be transported through a network of over 188km of pipes (flowlines) to the 190,000 barrels per day Central Processing Facility (CPF) at Ngwedo sub-county in Buliisa district.
At the CPF, the crude will be processed and stabilised and later transported via a 96km feeder pipeline to Kabalega Industrial Park (KIP) in Hoima, home to the oil refinery and starting point of the East African Crude Oil Pipeline (EACOP).
EACOP WORKS STAND AT 44%.
Under EACOP, civil works are underway in both Uganda and Tanzania. The total land taken for EACOP is 12,435 acres, and 2,740 of this is found in Uganda.
According to the project status report, the overall progress of the engineering, procurement, construction, and commissioning activities for the EACOP project is at approximately 44%.
Panyu Chu Kong (PCK) Steel Pipe Co. Limited, the line pipe supplier for the EACOP, has so far supplied a total of 800km worth of pipes, of the 1,443km pipe network needed for the EACOP. This implies that only 643km of the EACOP pipes are left to be delivered.
The pipes have since been delivered to the Thermal Insulation Facility at Nzega in Tanzania.
The insulation of the pipes commenced in July, with the testing of the thermal insulation facility.
Currently, over 40km worth of line pipe have been insulated, with the facility operating at a rate of 2.5km per day.
The first batch of line pipes, equivalent to about 860 metres, entered Uganda in September 2024 and the welding is ongoing at Pump Station 1, located in Buseruka in Hoima district.
Relatedly, construction works at Pump Station 1 in Hoima and Pump Station 2 in Sembabule are currently underway, with the main works involving the construction of foundations for the process facilities, utility systems and electrical systems.
According to the status report, the progress of the civil works at Pump Station 1 stands at 18%, while that at Pump Station 2 is at 19%.
There are five main camps and pipe yards that will be used to support the construction activities of the EACOP.
The construction of these camps is currently underway and it involves fencing, construction of foundations, installation of porta cabins, installation of drainage and utility systems, installation of electrical systems and construction of earth berms for line pipe storage, among others.
“As of August 18, the progress at the Main Camp at Pump Station 1 (MC-PS1) was at 55.4%, Main Camp and Pipe Yard (MCPY)-1 was at 12.3%, MCPY-2 was at 12.7%, MCPY-3 at 43% and MCPY-4 at 7.7%,” the progress report indicates.
In Tanzania, the coating plant for pipes was constructed and operationalised, with works on the jetty and storage terminals underway at Tanga, on the Indian Ocean coast.
It should be noted that the EACOP project will cost about $5b in construction, with 60% loan and 40% equity from four shareholders.
The shareholders are the Uganda National Oil Company (UNOC) and the Tanzania Petroleum Development Corporation (TPDC), each with 15% shares, representing Uganda and Tanzania, respectively.
The other shareholders are TotalEnergies, with a 62% stake and CNOOC with 8% shares.
As of September this year, a total of $2.503b had been invested in the EACOP by shareholders and key agreements were being concluded by the EACOP and the Government to unlock debt financing from a set of lenders.
According to sources, these key agreements need to be finalised to achieve the financial close expected by next month.
John-Bosco Habumugisha, the deputy managing director of EACOP, noted that next year will be a peak year of construction and implementation of all project activities at every front. He explained that the EACOP pipeline is a transport system that has been designed in a way that is robust, intelligent and sustainable, utilising green (hydropower) energy from Uganda and Tanzania.
According to Habumugisha, the facility will have leak detection and prevention technology, a fibre optic system for sensing any interference, and block valves for isolating any section of the pipeline that is identified as requiring intervention.
“As we work to commercialise the oil and gas resources in Uganda (and generally in Africa), pipeline infrastructure remains a key component to be developed, so as to de-risk upstream investments and provide linkages to international markets.”
He added: “This requires that strategic partners are secured and provided with a conducive environment for investment over the long term. As technical resource persons, we are happy that Uganda’s leadership has remained resolute in this commitment.”
STATUS ON LAND ACQUISITION
The land acquisition for Uganda’s oil and gas projects requires a total of 6,661 acres, affecting 10,042 Project Affected Persons (PAPs) for the three flagship projects of Kingfisher, Tilenga and EACOP.
Gloria Sebikari, the manager corporate affairs at PAU, explained that some PAPs were only affected by having part of their gardening land acquired by the projects, while for others, their dwelling places had to be relocated. Those in the latter category, she said, are less.
However, Sebikari noted that the trio projects have made considerable progress in land acquisition, with compensation standing at 100% for Kingfisher, 99% for Tilenga and 97% for EACOP.
REFINERY DEAL IN TWO WEEKS
For the construction of Uganda’s oil refinery, the Government and the lead developer of the project, Alpha MBM, a Dubai firm, are set to conclude on commercial agreements in about two weeks.
Once concluded, the Government and its partner will then announce the Final Investment Decision (FID), which will mark the start of the construction phase for the oil refinery.
The key agreements under negotiation are the implementation agreement, the shareholder agreement and the crude supply agreement.
The Implementation Agreement will spell out the timelines and activities to be done, whereas the Crude Suppliers Agreement is intended to put the needed feedstock of 60,000 barrels of crude oil per day needed for the refinery.
On the other hand, the shareholders’ agreement lays out the financial obligations of each part, such as cash calls and defaults, and stipulates the voting rights.
The Uganda Refinery Holding Company, a subsidiary of the Uganda National Oil Company, will hold a participating interest of up to 40% in the Refinery Company on behalf of UNOC and the Government.
The 60,000 barrels per day refinery is expected to cost between $3b and $4b, with a return of 15%– 20%, depending on the price of crude oil and petroleum products.
Irene Bateebe, the energy ministry’s permanent secretary, the sector lead institution, explained that when a Memorandum of Understanding was signed with Alpha MBM early this year, a number of arrangements had to be put in place to aid the negotiations.
Subsequently, the negotiations progressed mid-year and the key agreement being negotiated is the Implementation Agreement.
“The development, commercial, and financing plans are part of the negotiations and this will form the final position on timelines for the project,” Bateebe told the New Vision.
However, she explained that some works on the refinery, such as the Resettlement Action Plan study for the refined products pipeline, were completed and implementation is ongoing.
Bateebe indicated that at least 75% of the refinery PAPs were compensated and that the remaining 25% will equally receive their compensation in the course of this financial year, 2024/2025.
Additional reporting by
Wilson Asiimwe
93 OIL WELLS
The latest report on the ongoing oil and gas developments has highlighted that a total of 93 oil wells, of the 170 needed for first oil (Four Quarter of 2025), have been successfully drilled.
NEW AIRPORT CONDUCTS TEST FLIGHT
The Government has conducted a test flight for the newly constructed Kabalega International Airport in Hoima district.
According to the works and transport ministry, the test flight was successful, ahead of its full operationalisation.
The development was revealed on Thursday by Fred Byamukama, the state minister for transport, during his visit to the facility.
Byamukama explained that construction of Uganda’s second international airport, the Kabalega International Airport in Hoima, now stands at 95% complete.
So far, a 3.5km-long and 45m-wide runway, the cargo terminal building and a limited-capacity passenger terminal building, have been completed at the airport.
The other facilities installed include, the air rescue fire fighting house as well as the air-ground lighting system.
According to the works ministry, the facility is expected to be fully operational by August 13, next year.
Launched in 2018, the ambitious project is set to become a major catalyst for Uganda’s growing petroleum sector, as well as tourism and agriculture.
The minister revealed that the Government has so far spent sh1.08 trillion, out of the sh1.188 trillion project budget.
Buchbut Sharly, the managing director for SBI International, which is currently undertaking the construction works, said: “We are ready to hand over the airport next year, because most of the works have been completed; we were only delayed by the COVID-19 pandemic,” Sharly said.
Economic impact
According to government projections, the upstream projects will generate annual average revenues of between $1b and $2.5b for the country, depending on the international oil price achieved.
This seems to rhyme with the projections by the International Monetary Fund (IMF), which in their September report on Uganda, predict that the country’s economy will grow by double-digits when oil starts flowing next year.
According to the IMF’s September 2024 report on Uganda, the country’s medium-term economic outlook will receive a significant boost from the initiation of oil production.
With oil production expected to commence in the fourth quarter of 2025, the IMF report forecast indicates that Uganda’s Gross Domestic Product (GDP) will receive a significant boost, achieving double-digit growth during the financial year 2025/2026.
In the financial year 2025/2026, the IMF projects that Uganda will export about 70 million barrels of crude oil.
This, in return, the report says, will take the country’s GDP growth from the current 6% to 11% in the financial year 2025/2026.
Although the GDP growth will likely drop to 9% in the financial year 2026/2027, the IMF indicates that it will still be significant and 3% higher than the current trends.
The IMF projects that Uganda’s domestic revenues will gradually increase when we start oil production from $15b (sh55 trillion) in 2025/2026 to $19b (sh70.6 trillion) in 2028/29.
Under the current financial year, 2024/2025, Uganda targets to collect about sh32 trillion in domestic revenues.
This implies that oil production will earn Uganda sh23 trillion more in domestic revenues than the current targets come 2025/2026.
