Uganda secures oil refinery deal

With the support of the African Legal Support Facility (ALSF), the Government of Uganda has successfully signed an agreement with a consortium of American and Italian firms to finance and construct a US $4-billion refinery in the country’s Hoima district.

The project will be a joint venture with the Ministry of Energy and Mineral Development and the Uganda National Oil Company (UNOC), a limited liability oil company owned by the Government of Uganda.

The signing ceremony for the agreement took place on April 10, 2018 in Entebbe, Uganda. The agreement establishes critical terms and conditions for the oil refinery’s development and represents an important milestone in the commercialization of Uganda’s natural resource endowments.

Following an emergency request made by the Ugandan government in June 2017, the ALSF responded by providing capacity building and training support in the area of contract negotiation to the Uganda National Oil Company. The Facility also supported the Ugandan government by making available an international legal firm to provide advisory services for their ongoing negotiations.

The current reserves of crude oil in Uganda’s Albertine region are estimated to be approximately 6.5 billion barrels. The oil refinery is expected to have a 60,000 barrels-per-day processing capacity, and is expected to intensify production shortly after the facility’s inauguration.

Ever since commercially viable hydrocarbon deposits were discovered in Uganda in 2006, the Government of Uganda has launched a development strategy which seeks to translate their presence into regional development and inclusive economic growth.

“This agreement is a key step towards the construction of the oil refinery in Hoima District,” said President Yoweri Museveni of Uganda, “since it ensures development, design, financing, construction, operation and maintenance of the facility.”

“Today’s signing ceremony, and this project in particular, are a ‘game changer’ for the country and for UNOC,” explained Josephine Wapakabulo, Chief Executive Officer of the Uganda National Oil Company.

“The development of the refinery will trigger a number of other investments in the energy-based industries and thus contribute to economic development of Uganda and will contribute to the achievement of middle-income status,” she added.

Wapakabulo provided her signature on behalf of the Ugandan government, while Rajakumari Jandhyala, CEO of Yaatra Ventures, signed on behalf of the Albertine Graben Consortium. The signing ceremony was also attended by Director and CEO of the ALSF, Stephen Karangizi.

In August 2017, the Ugandan government elected to conduct negotiations with the Albertine Graben Refinery Consortium, which is composed of General Electric Oil and Gas, YAATRA Ventures LLC, Intracontinental Asset Holdings Ltd and Saipem SpA.