Uganda inks deal for country’s first refinery

The Ugandan government, through the Ministry of Energy & Mineral Development together with state-owned Uganda National Oil Co. (UNOC), has signed a project framework agreement (PFA) with the Albertine Graben Refinery Consortium (AGRC) to develop, design, finance, build, operate, and maintain a grassroots 60,000-b/d refinery in Kabaale, in western Uganda’s Hoima District.

Signed on Apr. 10, the agreement allows for AGRC—comprised of YAATRA Africa LLC, Mauritius; Lionworks Group Ltd.; Mauritius; General Electric Co.’s Italian subsidiary Nuovo Pignone International SRL; and Saipem SPA of Italy—to move forward with the refinery’s development, the Ugandan government said in a series of releases.

In line with the Uganda National Oil & Gas Policy (2008) to provide for expanding and developing necessary infrastructure to bolster the country’s oil and gas sector, signing of the PFA paves the way to start pre-final investment decision (FID) activities such as front-end engineering and design (FEED), project capital and investment costs estimations (PCE), environmental and social impact assessments (ESIA), among others, according to the parties.

Under the PFA, the GE-led AGRC will be responsible for funding all pre-FID activities for the project as well as construction and operation of the refinery, which is to be developed as a commercially viable venture with a regional market focus.

To be equipped with the latest processing technologies and environmental controls and designed to process crude from Uganda’s oil fields currently under development, the refinery, once completed, will produce kerosine, gasoline, diesel, heavy fuel oils, and other products for supply to the Ugandan and regional markets, the government said.

Irene Muloni, Uganda’s minister of energy, estimated the project’s overall cost at about $3-4 billion.

While it disclosed no further details regarding a timeframe for construction and commissioning of the refinery, the government said the project will be implemented by a special-purpose refining company to be incorporated by the consortium and UNOC subsidiary Uganda Refinery Holding Co.

The agreement follows the Ugandan government’s June-2017 selection of AGRC to negotiate the PFA for the project’s development following earlier failed attempts for construction of a refinery with other consortia (OGJ Online, July 5, 2016; Feb. 17, 2015; June 4, 2014; Feb. 2, 2010).

Uganda’s oil resources currently stand at about 6.5 billion bbl, of which an estimated 1.4-1.7 billion bbl are recoverable, according to the government.

Contact Robert Brelsford at [email protected].