World

Saturday 26 July 2014

Uganda signs crude oil deal with Tullow Oil

Fred Ojambo

Published 07/02/2014|02:30

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Tullow Oil drilling in Kampala, Uganda. Reuters
Tullow Oil drilling in Kampala, Uganda. Reuters

The government of Uganda, home to sub-Saharan Africa's fourth-largest oil reserves, signed a deal with Tullow, Total and Cnooc on a refinery and pipeline that may clear the way for the start of crude output.

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The agreement details plans for the initial use of oil flows in power generation before a refinery is built, probably by 2018, along with an export pipeline, Ugandan Energy Minister Irene Muloni said.

"The conclusion of the MOU is a significant step as it gives a road map for the commercialisation of petroleum resources discovered in the country," Ms Muloni added.

Significant output of oil, which was first discovered in Uganda in 2006, is expected by the government to start by 2016 after a series of delays.

Uganda has sub-Saharan Africa's biggest oil reserves after Nigeria, Angola and South Sudan, according to the International Monetary Fund.

The plant will have a processing capacity of 60,000 barrels per day, which can be expanded, and get "first call" on oil produced at licensed areas, Ms Muloni said.

The companies may also choose to export the oil using "any other viable option", she added, without providing more details. (Bloomberg)

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