Uganda sees local jobs bonanza after signing of key oil deals

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Uganda expects that 60,000 direct and indirect jobs will be created for locals in its petroleum sector by 2025, Energy and Mineral Development Minister, Dr Mary Goretti Kimono Kitutu said yesterday (Tuesday), a day after the country signed key field and pipeline development deals.

Officials in the East African nation, and their Tanzanian counterparts, signed three accords with France’s Total and China’s CNOOC to help kickstart development of crude pipeline and oil fields.

“Significant investment into Uganda’s economy… has now been unlocked,” Dr Kitutu told a news conference.

Officials at the pipeline company said contracts for its construction will be awarded to interested firms soon.

A total of 14,000 Ugandan nationals will be employed directly by Total, CNOOC and the pipeline, while 45,000 will be employed by their contractors, the minister revealed.

An additional 105,000 Ugandans would also find work “as a result of utilisation of other services by the oil and gas sector.”

“Ugandan companies will greatly benefit from the involvement of world-class oil service companies, expected Joint Venture Partnerships and sub-contracting opportunities,” Ms Kitutu said.

The development of the pipeline and the oil fields could potentially boost Uganda’s economic output by close to a quarter, by 2025, the minister added.

The $3.5 billion East African Crude Oil Pipeline (EACOP), to run 1,445 kilometres, has been described as potentially the world’s longest electrically heated oil pipeline and will help landlocked Uganda ship its crude to international markets.

It will run from oil fields in Uganda’s west near the border with Democratic Republic of Congo, where oil was discovered in 2006, and terminate at Tanzania’s Indian Ocean seaport of Tanga.

The significant investment that has now been unlocked into Uganda’s economy includes the implementation of the Kingfisher Project in Hoima and Kikuube districts (approx $1.5b), Tilenga Project in Buliisa and Nwoya districts (approx $4b) and the East African Crude Oil Pipeline (EACOP).

The EACOP will cross 10 districts of Hoima, Kikuube, Kakumiro, Kyankwanzi, Gomba, Mubende, Lwengo, Sembabule, Kyotera and Rakai in Uganda (approx $3.6b).

This is in addition to what Government is already investing in the required support infrastructure, including Hoima International Airport (over $500m) and 700 kilometres of oil roads (approx. $900m).

The country’s gross reserves are estimated at six billion barrels while recoverable oil is seen at 1.4 billion barrels.

Dr Kitutu also noted that the conclusion of these key agreements for the EACOP is a major requirement for the announcement of the Final Investment Decision (FID).

“There is no document that will be signed for, or called, “FID”; the project launch on Sunday, 11th April, 2021 at State House, is a demonstration of the commitment the respective Governments and oil companies have for the projects. With these agreements in place, the oil companies and Government will proceed with the approval and award of contracts to the main Engineering, Procurement and Construction (EPC) contractors,” the minister stressed.

Mr Robert Kasande, the Permanent Secretary, in the Ministry of Energy  and Mineral Development, noted that the runway at the Hoima international airport is almost ready.

“Any equipment needed in the short term will continue to come in by road. However, the airport has made significant progress and will be ready by the time delicate and/or voluminous equipment are required fast by the projects,” he said.

By the end of the construction phase, Uganda’s GDP will be significantly boosted through sectoral linkages by close to $ 9 billion. This is a 22% increase of the current GDP, which is expected to reach $ 40.1 billion in 2020/21.

Mr Dozith Abeinomugisha, the acting Executive Director, Petroleum Authority of Uganda (PAU) illustrated the labour needs of the industry with a description of the past industrial baseline survey.

“With maturity of projects over the years, the studies and designs have painted a clearer picture of the specific work requirements. This year, we shall carry out and complete a new industrial baseline survey that will shed more light on the labour needs,” he said.

Mr Abeinomugisha urged Ugandans who would like to work in, or supply goods and services to the sector, to register on the National Supplier Database (NSD) and the National Oil and Gas Talent Register (NOGTR).

“Globally, the countries that have done well in the oil and gas sector are those whose citizens have participated,” he noted.

Currently, contracts worth $167m out of the $1.362b Recommendations to Award (RTAs) for the Tilenga and Kingfisher projects that have been presented to the PAU will be awarded directly to Ugandan companies.

This accounts for only 19 out of the over 30 work packages to be awarded by the Licensees. There are also many more subcontracts given to Ugandan companies through subcontracting by the Level-1 contractors.

On behalf of the investors in Uganda’s oil and gas sector, Pierre Jessua, the General Manager, Total E&P Uganda Limited, reiterated their commitment to promoting national content development in the implementation of the oil and gas projects.

“We are dedicated to building the capacity of Ugandans in the oil and gas industry through knowledge exchange and training with the expertise available to us,” he said.

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