Uganda Seeks Investors for $2 Billion, 150,000-Barrel-Per-Day Refinery

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Uganda's State Minister for Energy Simon D'Ujanga said that Uganda is hoping to find suitable investors for a proposed $2 billion refinery by the end of this year. He said that the government has completed a general feasibility study for setting up a refinery with a capacity of 150,000 barrels per day (BBL/d), and if the financing structure and project funds could be put in place by the end of the year, construction work on the refinery would be started. The project will be Uganda's maiden refinery project. Hilary Onek, Minister of Energy and Minerals Development, said that once Uganda begins production of refined oil within the next three to four years, the country would stop exporting crude oil.

Meanwhile, Uganda has launched an international tender for conducting feasibility studies on the country's oil-production program for the Lake Albert Basin, which is located on the border of Uganda and the Republic of Congo. The study will cover the location and viability of the refinery project, as well as the oil product market of the region. The six-month study will be funded by the government of Norway and will begin October 20. The funds are part of a nearly $40 million financial package extended by Norway to Uganda to support the latter's agriculture, energy, forestry and petroleum industries. About $13.1 million of the funds will be utilized to set up institutions that will manage the country's oil and gas sector before oil production begins.

Foreign firms are continuing to show great interest in Uganda's oil resources, and new oil discoveries are being continuously reported. Foreign oil exploration companies that are currently operating in Uganda include U.K.-based Heritage Oil plc (LSE:HOIL) (Jersey, United Kingdom), Tullow Oil plc (LSE:TLW) (London), and Tower Resources plc (LSE:TRP) (London). The Ugandan government estimates that the Albertine Rift could have reserves of up to 2 billion barrels of crude. Vast tracts of the region have yet to be explored. The drilling success reported by Heritage Oil and Tullow Oil, which currently operate three blocks in the Albertine Rift, is the key driving force behind the international interest. While both firms have a 50% interest in two of the blocks, Tullow Oil has 100% interest in the third block. The three blocks cover a total area of more than 10,000 square kilometers.

Eni SpA (NYSE:E) (Rome, Italy) recently held talks with Ugandan president Yoweri Museveni and expressed interest in investing in the nation's oil sector. Eni would like to set up a refinery and build a 1,300-kilometer pipeline to transport refined products from Uganda to the port of Mombasa in Kenya. The pipeline will be a necessity once the refinery starts production and attains stability. The pipeline is expected to be ready by 2014. A railway line and several roads to the remote region are the other infrastructure projects that need to be implemented before refinery products can be successfully transported.

Provided the ongoing talks between Eni and Uganda are successful, a cooperation agreement is likely to be signed. Under the conditions of the agreement, Eni will join with Tullow Oil to implement a feasibility study for setting up a 100,000-BBL/d refinery in the Lake Albert region. The refinery products will be marketed in both the regional and domestic markets. Eni is also likely to acquire a stake in the oil blocks of the Ugandan Albertine Rift.

For additional information, see related articles - Uganda to Build First Domestic Oil Refinery with Iran (June 2, 2009) and Uganda Revives Plans for Mini-Refinery after Oil Discoveries by Tullow and Heritage Oil (May 18, 2009).

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project opportunity databases, market forecasts, high resolution maps, and daily industry news.