Uganda advances refinery plan, resettles residents


KAMPALA -- The Ugandan government has started resettling thousands of residents from a 30 km stretch of land in preparation for an oil refinery project, as the country advances plans to start developing its oil fields, the energy and minerals ministry said.

A total of 7,118 residents from 13 villages will be displaced from the Lake Albertine rift basin to enable the construction of a 30,000 bpd oil refinery, to supply refined fuel products on the local market, the ministry said.

The refinery project is one of the most contentious elements of a prolonged debate over how Uganda should develop its newfound oil reserves. The government is expected to spend up to $27.4 million to compensate the affected residents. "Educating the project affected persons in financial management and livelihood restoration is key to the success of the project." said Robert Kasande, the refinery project manager.

In April Uganda and three oil companies - Tullow Oil , Total and Cnooc agreed to building a refinery with a capacity of 30,000 bpd, much less than what the government had initially proposed.

The preliminary deal ended a two year deadlock, which is largely blamed for delaying the development of the country's oil fields. Construction of the refinery is expected to start early next year and its capacity will be upgraded to 60,000 bpd after a three year period.

Negotiations over the country's final oil development plans are continuing. Jimmy Mugerwa, Tullow's general manager on urged the government to "fast track the development" of its petroleum industry if Uganda is to stay ahead of the likes of Kenya that have also discovered commercial quantities of crude.

According to Mr. Mugerwa, Uganda's oil sector has witnessed minimal activity in the past two years, which is of concern to investors. The government is preparing to issue a tender for the construction of the refinery in the next few weeks, Mr. Kasande added.

The government has already hired Taylor-DeJongh to advise on the construction of the refinery. The firm will advise on the selection of a lead investor for the refinery, the sourcing of financing as well as the formation of a refining company. Ugandan oil fields are estimated to contain some 3.5 Bbbl of crude reserves.

Dow Jones Newswires

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