Albertine companies contracted for Uganda’s oil projects

A man works in the oil field.

Companies from within oil and gas host districts and communities are among other Ugandan companies that have been contracted to undertake some of the activities in the sector.

Companies like Kitara Development Initiative (KITADI), Kato Contractors, Living Earth Uganda and Kitara Civil Society Network (KCSON) have been contracted to take on the construction and social resettlement activities ahead of oil production in the Albertine Graben.

This was revealed by the Executive Director (ED) Petroleum Authority of Uganda (PAU), Mr Ernest Rubondo, during the Authority’s annual media briefing at Amber House in Kampala yesterday (Wednesday).

According to him other Ugandan companies undertaking works in the sector include MSL, GCC Services, Teclab, ICS / New Plan.

Oil companies have submitted contracts worth US$6b for more than 40 work packages for the Tilenga, Kingfisher and East African Crude Oil Pipeline (EACOP) projects to the PAU for approval.

Speaking to the press, Mr Rubondo said that following the launch of the oil projects in April 2021, the licensed oil companies have granted Conditional Letters of Awards (CLOAs) for contracts of the Tilenga and Kingfisher projects.

The ED revealed that the major contracts awarded include Tilenga project main Engineering Procurement Supply Construction and Commissioning (EPSCC) which was awarded to the consortium of McDermott/Sinopec that have commenced work.

These are currently taking forward detailed engineering and other activities in London UK, Beijing China and Gurugram, India.

ZPEB Uganda Company Limited, the drilling contractor has commenced the detailed design and construction of the drilling rigs to be used in drilling more than 400 wells, scheduled to commence in the last quarter of this year.

“You will note that some of the companies, which have been awarded these Tier one contracts include some of the biggest and well established engineering companies in the world.  They also have significant capital bases.  This is an important achievement, as these Tier one contractors, with large market capitalization are expected to set up base in the country”, Mr Rubondo averred.

He also dislosed that a contract for civil works and construction of well pads for the Kingfisher project together with in field access roads was awarded to a Ugandan company – Excel Construction Limited. 

Additional contracts for Kingfisher project, including drilling and well services are due to be awarded during this year.

Concerning the progress of works for the Tilenga Project, preparation of the 700 acres of Industrial Area was at 35 per cent completion at the end of 2021 and expected to be concluded by mid this year.

Mota Engil Uganda, the contractor undertaking the works has sub-contracted various Ugandan companies including Gauff Consultants, Prand Engineering, Pearl Engineering Civtec and Fabrication Systems among others.

These will undertake some of these preparatory works.

“Investments in the oil and gas sector in the country were US$230m in 2019, US$180m in 2020 then increased to about US$500m in 2021. These investments are expected to increase to about US$3b in 2022,” Mr Rubondo added.

Mr Ernest Rubondo, Executive Director Petroleum Authority of Uganda addresses the media on Wednesday. (Photo: PAU)

The Authority estimates that 40 per cent of the USD 15-20b to be invested during the development phase will be retained through national content.

Mr Rubondo added that planning for production by the Kingfisher and Tilenga projects was in advanced stages.

The plans include production of more than one billion barrels of crude oil from the Tilenga and Kingfisher projects out of which the Tilenga project is expected to produce an approximate 874 million barrels with a peak production of 190,000 barrels of crude oil per day.

“This production will be delivered by seven oil fields at the beginning of first oil production and the other three oil fields are planned to come on stream five years after first oil. These fields which will come on stream later will contribute to maintaining peak production over a longer period and enable gentle reduction in the production of oil”, Mr Rubondo said.

On climate change and use of renewable energy, Mr Rubondo said that oil and gas is still expected to be very valuable and viable for at least the next 40 years because of the prevailing high demand for oil and gas as evidenced by the growing global energy demand especially by the developing countries and the resulting high crude oil prices.

“There are some oil and gas products which cannot easily be replaced by renewable energy for example vehicle tyres, car seats, polyester for clothing and bitumen for road construction among others,” Mr Rubondo said.

He emphasised that Uganda’s oil and gas sector is being taken forward in a manner that reduces the negative impact on the environment adding that the gas from the oil fields will not be flared, neither will it be used only for electricity generation but for production of cleaner Liquified Petroleum Gas (LPG).

The ED also said that there are plans to use solar energy in the oil and gas activities like heating for aspects of the EACOP.

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