2nd February, 2022
Chinese oil giant China National Offshore Oil Corporation (CNOOC) and France’s TotalEnergies have announced the Final Investment Decision (FID) to start commercial production in Uganda.
FID is the detailed plan which an oil company will follow to develop an oil field.
A grand ceremony Tuesday attended by Ugandan President Yoweri Museveni, Tanzanian Vice President Philip Isdor Mpango, oil company chief executives and government officials was held at the Kololo Ceremonial Grounds in Kampala.
Museveni said he was happy that the project was finally taking off after protracted negotiations with the oil companies.
“I salute and congratulate TotalEnergies and CNOOC for finally reaching Final Investment Decision because I was getting a bit impatient. I am glad now we have concluded all the issues,” Museveni said.
The $10-billion project, according to Uganda’s ministry of energy and mineral development, includes the development of the oil wells.
It also includes the construction of a crude oil pipeline that will transport the oil from the wells in the Albertine Graben in western Uganda to the Tanzanian seaport of Tanga.
The 1,445-km pipeline, estimated to cost $3.55 billion, will be the world’s longest heated pipeline.
Due to the viscosity properties of Uganda’s oil, it has to be heated in order for it to flow.
Museveni said the revenues accrued from the oil will be critical in strengthening the country’s and the region’s economic development.
Mpango urged all partners to ensure that the project is implemented in consideration of the interests of local people and the environment.
“The international oil companies are reminded to adhere to labor laws including avoidance of child labor and ensuring environmental sustainability and conservation in line with the environmental and social impact assessment,” the vice president said.
Mpango said the multiplier effect from the project will spur regional growth as a lot of jobs would be created besides provision of services like hospitality.
According to Uganda’s ministry of energy and mineral development, first oil is expected in 2025 after completion of construction in the next four years.
Ruth Nankabirwa, Uganda’s minister of energy and mineral development, said the project will generate about 160,000 jobs besides provisions of goods and services.
She said the government has put in place the necessary laws to ensure that local companies and people benefit from the contracts to be offered by the oil companies.
“It would be shameful for food to be imported outside east Africa. We need to be prepared to partake of the chances that the industry is bringing,” Nankabirwa said.
Chen Zhuobiao, CNOOC Uganda president, said the company will stick to local laws and ensure environmental protection in the course of implementing the project.
“I wish to reiterate that CNOOC Limited is and has always been a firm believer in being a responsible energy company.
“And that is exactly what we put into practice – all of our operations are in strict compliance with the relevant laws and regulations, and our operational protocols live up to the best practices of the industry,” Chen said.
He said the oil fields will be developed in an environmentally friendly and sustainable manner.
Patrick Pouyanne, chief executive officer and chairman of TotalEnergies, said that respect for the rights of local communities is critical especially as the project requires land acquisition.
He said taking care of the local communities will be a top priority as the project is being implemented.
Uganda in 2006 discovered 6.5 billion barrels of oil, of which 1.4 billion barrels are commercially viable.
The country will have both a refinery and a crude oil pipeline.