By FRED OJAMBO
ENTEBBE (Bloomberg) -- Uganda is looking for a lead investor to develop a refinery estimated to cost $2.5 billion, two weeks after issuing its first production license to China National Offshore Oil Corp. as it seeks to exploit reserves.
The investor, either a company or a group of them, will be named by April and will take an interest of as much as 60 % in the facility, which is proposed to have capacity of 60,000 bpd, Robert Kasande, an assistant commissioner in the Energy Ministry, said by phone.
Uganda, classified as one of the worlds poorest nations by the World Bank, discovered oil in 2006 and has an estimated 3.5 Bbbl of crude, according to the Energy Ministry. Tullow Oil, Cnooc and Total are jointly developing the finds. The country has sub-Saharan Africas fourth-biggest oil reserves.
We need to finalize this process we have started by April, he said. The cost is still tentative as the accurate amount will be known after the investor conducts a feasibility analysis, he said.
The governments stake in the facility will account for as much as 40 %, and the nation has invited Kenya, Rwanda, Burundi and Tanzania, which are partner countries in the East African Community, to buy an interest of as much 10 % in the facility from Uganda, he said.
The refinery may be developed in two phases, starting with a daily capacity of 30,000 bbl, Kasande said. Construction will commence in 2015, while production starts 2017, he said.
The government secured 29 sq km of land for the refinery in the western district of Hoima and will hand it over to the investors by April after compensating affected residents, Kasande said.
The Energy Ministry on September 25 awarded Cnooc the first production license to develop the Kingfisher area in the Albertine region at a cost of $2 billion over four years. The area is estimated to hold 635 MMbbl, of which 196 MMbbl are recoverable. Kingfisher will pump 30,000 to 40,000 bpd, the ministry said.
Tullow and Total will get an oil-production licenses for other areas within weeks, Peter Lokeris, the minister of state for mineral development, said.
Uganda is eyeing both local and regional markets for its oil products, Kasande said. Landlocked Uganda is also negotiating with oil companies to build a pipeline to the Kenyan port of Lamu, according to the Energy Ministry said. President Yoweri Museveni and his Kenyan counterpart Uhuru Kenyatta agreed to develop the link in June, saying it would also have a loop to South Sudan.