Long-awaited oil investments start as Total, CNOOC sign big business contacts
The French company Total Energies and its Chinese equivalent CNOOC have today announced their commitment to invest over 10 billion US dollars between 2022 and 2025 in the development of an infrastructure that will finally allow the extraction and export of Uganda’s oil to the international market.
The announcement was made by the representatives of the two companies at a colourful ceremony held at Kololo ceremonial grounds attended by President Yoweri Museveni, the Vice President of Tanzania Philip Mpango, several Ambassadors and several high-ranking government of Uganda officials.
The long-awaited announcement – known technically as the Final Investment Decision (FID) in Oil and Gas lingua, was hailed by many speakers as a historic achievement between Uganda and Tanzania because it marked the culmination of many years of negotiations, making of laws and studies to ensure that Uganda, especially as the source country, benefits from the oil, but also to ensure that good conditions existed for big oil companies had an incentive to bring billions of money into the country’s nascent oil sector.
The Minister of Energy and minimal development Ruth Nankabirwa said: “This is a historic day because oil companies have today confirmed that the plan to invest billions of dollars into Uganda’s oil is viable.”
Proscovia Nabbanja, the Chief Executive Officer (CEO) of Uganda National Oil Company, (UNOC) which will represent Uganda’s interests in the process of developing the sector said the FID announcement means that the Oil companies have mobilized the money needed to sign the contracts to start work.
She added that Total and CNOOC have already signed contracts with both international as well as local companies to set up camps, roads and other amenities to support the extraction and export of oil from Western Uganda through to Tanga port in Tanzania on the Indian ocean.
Because of the big sums of money required to undertake the investments, poor countries such as Uganda that rely on foreign companies to bring in money to extract the oil, tend to celebrate the commitment by the investing companies.
A key part of the project is the construction of the heated East African Oil Pipeline that will be built to transport the crude oil from Buliisa in Western Uganda to the Tanzanian port of Tanga.
Negotiations over the mechanism of transporting the oil and which route to use – either to use Kenya or Tanzania – has taken over 10 years.
As president Museveni recollected, he had initially insisted on building an oil refinery, but was persuaded to accept the conditions of the oil companies to export the crude.
Besides getting taxes from the companies that will do business here, Uganda will receive a 15% share of the oil extracted in physical form and decide what to do with it.
The Permanent Secretary and Secretary to the Treasury Ramathan Ggoobi hailed the announcement and promised that his Ministry will do all it takes to ensure that the invested dollars achieve a multiplier effect to cause positive change in the lives of Ugandans.
Ggoobi said: “The Final Investment Decision (FID) for Uganda’s oil & gas is here. Over $10 billion (Ush 36Tn) to be invested in the economy in the next couple of years. We’re making effort to ensure higher multiplier effect of this money.”
Earlier, the French energy company Total Energies signed an MOU with Uganda’s Ministry of Energy to collaborate in the development of renewable energies such as nuclear and solar.