Oil Final Investment Decision expected by end of March 2021

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The Final Investment Decision will be taken before the end of March 2021, reveals Energy and Mineral Development Minister, Mary Goretti Kitutu.

Ms Kitutu revealed this while interfacing with the Parliamentary Committee on Natural Resources that sought clarifications on the sector’s Budget Framework Paper for the next financial year on Wednesday.

She emphasised that it is critical to have the Petroleum Authority of Uganda (PAU) well-funded such that there are no delays once the FID is finalised between February and March 2021.

FID represents the point at which the international oil companies (IOCs) and the Government of Uganda through the Uganda National Oil Company (UNOC) will commit to oil field development. 

The project execution phase should commence shortly after FID with significant expenditure on building the production facilities.

Mr Ernest Rubondo, the Executive Director (ED) of the Uganda Petroleum Authority (PAU) told the legislators that before the end of the first quarter of the calendar year, the FID will be taken adding that following this, four main projects will take shape with each of the projects costing more than $3b.

The ED said oil will not begin to flow until after a three year construction period, listing the projects as the production at Tilenga in Buliisa district operated by Total E&P Uganda and Tullow Oil, the production at the Kingfisher oil field in Kikuube district operated by CNOOC, the development of the crude oil pipeline from Hoima district to Tanga in Tanzania and the development of the refinery also in Hoima district.

Mr Rubondo said in order to meet the challenges of regulating the industry in light of the extensive investmentsm the PAU will have to be adequately funded adding that the Authority has been underfunded yet the regulation of the projects which will be running concurrently is critical.

According to him, the Authority will be expected to perform many functions on the ground including receiving and processing data before warning that without the additional funding the consequences of no regulation would be terrible.

According to the authority’s presentation before the law makers, the PAU funding allocation for the 2021/2022 financial year is Shs53.02b, leaving a funding shortfall of Shs136.138b.

Staff training requires an allocation of Shs7.398b but only Shs450.25m has been provided while regulation and monitoring of upstream petroleum operations requires Shs27.45bs but only Shs1.5b has been provided.

Mr Rubondo stressed that since Uganda is implementing maiden projects, the staff need to be trained to regulate and monitor these projects stating that the Authority will need additional staff in order to bring staff levels from the current 165 to the approved structure of 283 staff.

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