The Uganda Government said on Monday it had agreed preliminary terms with a consortium of investors including to build and operate the country’s first oil refinery, reviving a much-delayed project.
Authorities said a thorough review process of over 40 companies that expressed interest to developed the much anticipated oil refinery, the Government had agreed with the Albertine Graben Refinery Consortium (AGRC) for the project.
Companies selected under AGRC include; General Electric (GE), Oil and Gas (UK), YAATRA Ventures LLC (US), Intracontinent Asset Holdings Ltd and Saipem SPA (Italy) in the role of engineering partner (EPC).
Government geologists estimate Uganda’s oil reserves at 6.5 billion barrels, of which 1.4-1.7 billion are considered recoverable.
The oil is due to start flowing in 2020 and the government is keen to build a refinery to process it and retain a larger slice of profits.
Uganda suffered a setback last year in its efforts to secure a lead investor for a refinery project then estimated at $2.5 billion, after talks with Russia’s RT Global Resources broke down.
“We went back to the negotiation table over the construction of 60,000 barrels per day after our preferred bidder RT Resources pulled out of the deal in July last year at the time when Government and the multinational companies were to sign agreements for developing the project.We have since come of this situation and are on the right track,” said Uganda’s energy ministry’s permanent secretary, Dr. Stephen Isabalija.
Subsequent negotiations with a consortium led by South Korea’s SK Engineering also collapsed.
However, on Monday there was renewed hope for the project with the ministry of energy and mineral development said “core project terms” had been agreed with the Albertine Graben Refinery Consortium (AGRC), whose other members include India’s Yatra Ventures LLC, and Italy’s Saipem SpA .
“The consortium has proposed … a financing approach and a path to establish, develop and operate a commercially viable refinery,” the ministry said in a statement.
A project framework agreement was expected to be signed within two months, it said.
Energy and Minerals Development Minister Irene Muloni said in November that France’s Total, one of three oil explorers operating in the country, wanted to take up a 10 percent stake in the refinery project.
Kenya and Tanzania have committed to stakes of 2.5 percent and 8 percent respectively, Muloni said at the time.
Commercially viable hydrocarbon deposits were discovered in 2006, but production has been slowed by tax disputes and disagreements over development strategy.
An export pipeline under development is due to be completed by 2020.