M a r k e t N e w s

Uganda s oil refinery project good for East Africa

Posted on : Monday, 29th December 2014

 UGANDA'S progress in transforming the oil assets and the plan to build refinery project has attracted criticism, skepticism and resistance, a challenge that will test government’s stamina to make independent decision for the benefit of its citizens.This is after protracted efforts to search for oil and gas in the Lake Albert basin confirmed 2.5 billion barrel of crude oil in reserves meaning that at least one billion barrels oil equivalent can be recovered.Amongst oil producers

Such asset base propels Uganda in the league of countries like Peru, Trinidad & Tobago, Denmark, Italy and Romania in Europe and Latin America.In Africa, Uganda is in the rank of Chad, Congo Brazavile, Equatoria Ginea and Tunisia. While in Asia, the discovered oil base puts Uganda in the group of Brunei and Thailand.But Uganda is still a long way from the tens of billion in Nigeria, Libya and the United States or the hundreds of billions of barrels in Iran, Iraq, Kuwait, Venezuela or Saudi-Arabia.Moreover, Uganda boasts of over 90% of success discovery rate meaning that from the total of 72 drilled oil wells only 4 wells did not encounter oil or gas.Interestingly the cost of finding oil in Uganda is far cheaper compared to global trends. Finding oil in Uganda is less than a dollar per barrel. In the global scale the finding cost ranges between $5 and $20 per barrel. Value addition
With the established asset base of 2.5 billion barrels in place, Uganda intends to deliver natural gas as the initial feestock to supply a 50 Megawatt dual power station to increase electricity supply.In addition to gas, heavy fuel oil from extended well tests will be used for the power station. This is also aimed at to increase capacity and life the power station to 25 years.Most important is that a detailed feasibility study for the development of refinery in Uganda confirmed economically feasible and beneficial compared to export of crude oil.The Net Present Value for a Ugandan refinery project to process 60,000 barrels of oil per day at an initial investment of $3.2b has post tax rate of 33% Plans are underway to execute the project under the private public partnership.

Source : New vision
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