By NICHOLAS BARIYO
KAMPALA, Uganda -- The Ugandan government said Wednesday
that the construction of its first oil
refinery will come on stream by 2018 as the East African nation
continues to develop its nascent oil sector.
The refinery, located in Hoima district, some 130 miles west
of the capital Kampala, will supply refined petroleum products
to the domestic market, as the country seeks to slash its
imports bill and become self-sufficient in fuel products.
"The government plans to develop a refinery...starting with
a capacity of 30,000 barrels per day by 2018 which will be
increased to 60,000 barrels per day before 2020," the energy
and minerals ministry said in a statement.
The refinery project, which is expected to cost
$2 billion, is one of the most contentious elements of a
prolonged debate over how Uganda should develop its newly found
oil reserves, estimated to be around 3.5 billion bbl of
In April, the government agreed to approve the construction of a smaller refinery
along with a crude export pipeline to the north Kenyan coast,
breaking a nearly-two year impasse with foreign oil companies
that delayed the development of the sector.
Last month, China's state-owned Cnooc said it was interested
in investing in the refinery, days after the Ugandan
government announced that it would pay for Chinese-built
infrastructure using future oil revenues.
The Chinese company, together with UK-based Tullow Oil and
France's Total, are in the process of developing Uganda's oil
fields in the Lake Albertine Rift basin. Cnooc is so far the
only company among the joint venture partners to express an
interest in the project.
Uganda discovered commercial oil reserves in 2006 but the
development of the fields has dragged on, partly due to
disagreements between the oil companies and government over the
development plans and refining options.
Last month, Tullow said that it had made "substantial
progress" with its partners and the government and expects to
sign a memorandum of understanding for the development of the
country's oil fields. The government has hired US-based
investment firm Taylor-DeJongh, which is providing advisory
services on the selection of a lead investor for the refinery, the sourcing of financing
as well as the formation of a refining company.
Dow Jones Newswires