Few months after Parliament passed some laws to regulate the Oil Sector in Uganda, Government has signed a memorandum of understanding [MOU] to kick start oil production with Britain’s Tullow Oil, Total of France and China’s CNOOC, the government officials have revealed.
East Africa’s third-largest economy struck hydrocarbon deposits in 2006 but a tussle with oil companies over Uganda’s demand for a refinery postponed commercial production, which is now expected to start in 2016 at the earliest.
“The government has signed a memorandum of understanding on the sustainable development of the discovered petroleum resources in the Albertine Graben (basin) with the licensed oil companies operating in the country,” the Energy Ministry said.
It said the deal was signed late on Wednesday with the Ugandan units of Tullow, Total and CNOOC, which have formed a joint venture to develop the fields.
A formal ceremony to mark the signing was held on Thursday, in the presence of President Yoweri Museveni, Irene Muloni the Minister of Energy among other officials at State House Entebbe.
The ministry said the memorandum of understanding provided a framework for commercial production, including providing fuel for power generation, supplying crude oil to the refinery planned by the government and export of crude by pipeline.
Energy Minister Muloni said last month that developing Uganda’s oil fields and building infrastructure would cost between $15bn and $22bn, although there were plans to try to reduce that.
Uganda has agreed to build a pipeline to run to Kenya’s planned new Indian Ocean port of Lamu, which is expected to become an export terminal for crude from Uganda, Kenya and other countries in the region.
However, critics particularly politicians in the opposition have described the recent development as a “sham” exercise which is not transparent justifying that the Memorandum of Understanding is still being kept a top secret to only a few individuals even though the Oil is a national resource.
It is worth to remember that the a section of Ugandans including politicians from across all political parties and other civil societies fought heard to compel government to make the Oil agreements between Government and several Oil companies public after learning that they had a “confidentiality” clause which barred any Ugandan apart from few people to know the contents and the transactions from Oil.
Ugandan Government particularly the President has a lot of hope in the Oil resource as far as boosting the Country’s economy in the region is concerned and he has already indicated that part of the Oil revenue would be used for infrastructure development with part of the monies which were raised from the capital gains by a number of Oil revenues already used to procure fighter jets.