Oil and gas: EACOP Bill to unlock FID

Mr Ali Ssekatawa, Director Legal and Corporate Affairs at the Petroleum Authority of Uganda (PAU).

Parliament’s passing of the East African Crude Oil Pipeline (EACOP) Special Provisions Bill 2021, will pave way for the Final Investment Decision (FID) in Uganda’s oil and gas industry, according to the Director Legal and Corporate Affairs at the Petroleum Authority of Uganda (PAU), Ali Ssekatawa.

The Bill seeks to facilitate the full implementation of Uganda’s obligations under the Intergovernmental Agreement and the Host Government Agreement (HGA).

Mr Ssekatawa said the Bill will enable legislation to operationalise the agreements is a requirement for the International Oil Companies (IOCs) to announce the FID for Uganda’s oil projects.

“The EACOP Bill will also enable the Uganda National Oil Company (UNOC) meet its final obligation as a Joint Venture Partner (JVP) and create a harmonised law for operationalisation of the EACOP in Uganda and Tanzania,” he said.

Adding: “The Bill will also enable UNOC to pay its share of the transportation fees without attracting penalties and all National Oil Companies (NOCs) operate a similar manner and not as statutory agencies”

Mr Ssekatawa revealed this during the virtual editors’ seminar on oil and gas yesterday (Thursday).

UNOC was established as a commercial entity to do business on behalf of the government of Uganda.

Mr Ssekatawa said this can only be achieved once the EACOP Bill is passed with the current clauses without amending them.

Tanzanian government passed the Bill in August 2021 while Ugandan authorities have been meeting with lawmakers to have the legislation passed.

The proposed legislation will enable some provisions of the of the Intergovernmental Agreement signed between Uganda and Tanzania as well as the HGA signed between Uganda and EACOP Ltd to allow for progress of the project.

After making the FID, Oil companies (Total E&P Uganda (TEPU) and China National Offshore Oil Corporation (CNOOC) will invest between $15b and $20b in the industry in the next five years.

Last week, Energy and Mineral Development Minister, Ruth Nankabirwa, told the Oil and Gas Symposium in Tanzania that the Bill would be out of Parliament before the end of last month (November).

Current status       

Mr Ssekatawa said following the signing of the key oil agreements on April 11 and launch of the projects, the oil companies are issuing contracts for the Engineering Procurement and Construction (EPC) work packages and the site clearance works for the Tilenga project industrial area that will host the Central Processing Facility (CPF) and base camps.

Three categories of companies will participate in the oil sector: tier 1, 2 and 3.

Tier 1 contracts are multi-million or billion dollar contracts that are given to major companies who also sub-contract several companies in Tier 2 who later also sub-contract companies in Tier 3 or enter into a joint venture with international companies to offer goods and services.

He said almost all the 45 contractors that fall in Tier 1 have been awarded with contracts and are currently developing fields in both Kingfisher and Tilenga projects.

The major works shall be in three areas including Tilenga, Kingfisher and EACOP projects which commence construction in July 2022.

Major contracts in the Tilenga project where more than 20 are in Tier 1 shall be awarded in areas of industrial area site preparation, construction project management, access roads, upgrading Bugungu airstrip, well pads and lake water abstracts site preparation, mud togging services and electrical logging services among others.

In Kingfisher project, major contracts where more than 15 are in Tier 1 shall be awarded in wellhead and Christmas tree and EPC – 4 feeder pipelines among others.

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