Buyuma Weekly Uganda Energy Roundup(Wk 10)
Hello There,
Welcome to this week's?Buyuma Ugandan oil and gas weekly update?covering?the latest energy?news that made waves in Uganda.
Ms. Peninah Aheebwa, the Director of Economics and National Content Monitoring at PAU told the EWURA delegation that Uganda’s deliberate commercialisation strategy is twofold; optimal exploitation of the resources, and ensuring the country retains a good percentage of the investments.
She added that unbundling the contracts, encouraging subcontracting, and joint ventures ensured that Uganda scores well on the national content front. In addition, 92% of the over 6,800 people employed in Uganda’s oil and gas sector were Ugandans.
Below are?updates that made the headlines in Uganda's Oil and Gas sector
Tanzania commends Uganda’s oil and gas local content policies
The Energy and Water Utilities Regulatory Authority (EWURA) of Tanzania has applauded the?Petroleum Authority of Uganda ?for steering a robust local content framework for the oil and gas sector.Tanzania's Energy and Water Utilities Regulatory Authority (EWURA)?
EWURA is the regulatory body for oil-related activities in Tanzania. EWURA’s board and top management were in Uganda recently on a week-long supervisory field visit to the East African Crude Oil Pipeline (EACOP) section of Uganda, and the upstream developments in the Albertine Graben.
The delegation was led by the Tanzanian High Commissioner to Uganda, Dr. Aziz Ponary Mlima, and the EWURA board chairperson, Prof. Mark Mandosya. The delegation started their supervisory visit from Dar-es-Salaam, following the EACOP route en route to Uganda via the Mutukula border point in Kyotera district.
During a review meeting held in Kampala between the Petroleum Authority of Uganda (PAU), and EWURA, Prof. Mandosya said their five-day working field visit had shown that Uganda has surpassed many other African countries in ensuring that Ugandans participate actively in the oil and gas sector.
“We are glad to have had a candid tour of Uganda's oil and gas projects. I should say that I’m impressed with the progress of work, and the number of Ugandans employed on this project,” Prof Mandosya said.
He added that Uganda’s delay in developing its oil and gas resources had helped prepare the ground, which is a commendable feat.
Dr. Jane Mulemwa (PhD), the PAU Board Chairperson who led the PAU team on the joint field visit re-echoed Uganda’s commitment to developing its resources in a sustainable manner that is beneficial to both countries.
“The benefits realized and those expected to be realized from the production and commercialization of these oil and gas resources are indeed enormous and will positively impact the economies of both countries,” said Dr. Mulemwa.
“We have approved contracts worth US$ 6.9bn since the announcement of the FID (Final Investment Decision), and of these, at least US$ 1.7 bn has been earmarked for Ugandans at the different levels, Ms. Aheebwa revealed.
Uganda’s National Content Policy requires every entity that is to be contracted for the oil and gas activities to register on the National Suppliers Database (NSD), an online repository that is overseen by the PAU. This gives the PAU visibility on companies that are given contracts by the International Oil Companies. The PAU is charged with approving of?contracts in the oil and gas sector, and requires every contractor to submit a national content plan before it is awarded a contract.
The PAU and EWURA are jointly monitoring and regulating the construction of the 1,443km EACOP project that will transport Uganda’s crude oil from Kabaale, Hoima in Uganda to the port of Tanga in Tanzania before being shipped to the international market.
The EWURA team was in Uganda from 1st to 5th March 2023, and visited some of the resettlement houses handed over to the Project Affected Persons in Kyotera, and Ssembabule districts. The delegation also visited the Main Camp and Pipe Yard (MCPY) 1,3,& 4 in Kakumiro, Sembabule and?Kyotera respectively. The MCPYs will be used for storage of pipes, piping and equipment for the construction of the EACOP and act as construction support bases.
During the visit it was noted that the EACOP is green project planned to use renewable energy a mix of hydropower and solarisation as power supply to the project in line with energy transition.
Mr. Dozith Abeinomugisha, the Director Midstream at PAU told the visiting delegation that Uganda had made commendable progress on the EACOP project especially on the land acquisition process.
“Compensation of PAPs?for Main Camp & Pipe Yard (MCPY) 1 is at 100%, MCYP2 and Pump Station 2 is at 99% with only one PAP left,” Mr. Abeinomugisha said.
In upstream, the delegation visited the Tilenga Project under the operatorship TotalEnergies EP Uganda, the Kingfisher project under the operatorship of CNOOC Uganda in Kikuube district, and the Kabaale Industrial Park that will host among others, Pump Station 1,?the proposed refinery, and the Kabaale International Airport.
The EWURA Uganda visit coincided with the recent French Court ruling that threw out a lawsuit brought by environmental campaigners against TotalEnergies over its oil projects in Uganda and Tanzania. The campaigners wanted the court to order TotalEnergies to stop the East African projects under France’s duty of vigilance law.
Prof. Mandosya said the ruling was an indictment?for those who were vouching for the failure of the EACOP.
“This is the largest project to be undertaken between Uganda and Tanzania since Independence, as such as EWURA and PAU we have an enormous responsibility to ensure that this project succeeds and is undertaken as per the regulatory requirements in both countries,” Prof Mandosya said.
Dr. Mulemwa quipped that she “had no doubt that they would lose that case unless the rest of the whole world had gone mad. She said the campaigners “didn’t know what is on ground, but the facts are there for everyone to see.
During the review meeting,?Ambassador Dr. Aziz Ponary Mlima applauded the two regulatory agencies and urged them to continue the cooperation and share with the public information to close the misinformation gab being utilised by the anti-EACOP campaigners.
The joint supervisory visits are undertaken in line with the Memorandum of Understanding signed between the PAU and EWURA in 2020.?The two regulatory agencies also agreed to work together to advance capacity of their staff through attachments, and aligning of all the monitoring and regulatory framework.
The PAU undertook a similar visit to the Tanzanian section of the EACOP?from 29th January to 6th February 2023.
Uganda’s natural gas resources as an alternative energy source
Globally, energy is one of the key drivers of economic growth and development. Overcoming energy poverty is one of the world’s great challenges. All the countries in the East African Region (EAR) are not producing sufficient energy to meet their current needs. No country achieves socio-economic development without its population having access to clean energy.
Currently, the energy mix in the region includes hydroelectric power, geothermal energy, solar, biomass and fossil fuels. Only about 10% of the EAR is electrified with about 90% utilizing biomass as a primary source of energy.
Goal seven (07) of the United Nations’ Sustainable Development Goals (SDGs) is “Ensure access to affordable, reliable, sustainable and modern energy for all”. However, the 2021 SDG report indicates that 759 million people in the world, of which 75% are in Sub-Saharan Africa, lacked access to energy. The report further indicates that a third of the world’s population depends on dangerous and inefficient cooking systems.
In Uganda, biomass is still the most important source of energy for most of the population. About 89% of the total primary energy consumption is generated through biomass, which can be separated into firewood (78.6%), charcoal (5.6%) and crop residues (4.7%). Electricity is contributing only 1.4% to the national energy balance while oil products, which are mainly used for vehicles and thermal power plants, account for the remaining 9.6%. Liquified Petroleum Gas (LPG) currents contribute less than 1% to the total primary energy consumption.
The discovery of commercially viable oil and gas deposits in Uganda presents a great opportunity to further improve the state of the energy sector in the region, and Uganda in particular. Plans are underway to put in place the necessary infrastructure to exploit and commercialize the discovered resources.
The treatment of oil during production will generate associated gas that will be first utilised to satisfy the internal requirements (that is; heating, blanketing, power requirements, etc.) for the normal oil production activities as a priority. The government required the Upstream licensees (that is; Total Energies E&P Uganda & CNOOC Uganda) to carry out studies to determine the optimal utilisation of any excess associated gas realised after meeting the internal requirements. The studies recommended LPG recovery from excess associated gas. The recovered LPG will be used to meet local and regional demand.
Also, as per the ongoing engineering design studies, the Refinery Project in Hoima is projected to produce LPG in its product slate. In total, the three projects (Tilenga Project area, Kingfisher Development area and the Refinery) are projected to produce about 330, 000 ton/year of LPG at peak.
LPG is a highly versatile energy source and can be used in a wide range of applications such as water and space heating, cooking, and alternative transport fuel.
Production and utilisation of LPG have a number of benefits for Uganda and the region. These include; direct health benefits from substantially reducing exposure to household air pollution from burning solid biomass fuels. Biomass smoke contains health-damaging substances, of which small soot particles of less than 10 microns in diameter (PM10), are among the most dangerous, as they penetrate deep into the lungs and are a factor in the development of acute lower respiratory disease, chronic obstructive pulmonary disease, cancers and other illnesses.
Substituting biomass fuel with LPG which, is classified by World Health Organization (WHO) as a clean fuel will go a long way in solving health-related problems caused by biomass and other polluting fuels.
A reduction in emissions of other climate-active pollutants such as methane, black carbon and organic carbon released by inefficient solid fuel stoves, with the first two species contributing to global warming in the near term. LPG is a valuable fuel as it has almost no sulfur content, which results in cleaner burning. About half of the LPG used is consumed for heating and cooking and essentially is used in place of natural gas.
Less pressure on forests, from which wood fuel including charcoal is harvested contributes to the loss of forests. Depending on biomass as a primary source of energy continuously reduces carbon sinks and causes global warming. Deforestation due to the unsustainable use of firewood and charcoal can lead to soil erosion, desertification, and, in hilly areas, landslides. Therefore, substituting firewood with LPG reduces deforestation and can also improve agricultural productivity. This is because in addition to the dangers of deforestation, in poor countries, agricultural residues are often used as low-grade cooking fuel rather than natural soil fertilizer.
A reduction in labour time in fuel collection and cooking where there is dependence on solid fuels especially firewood and opens up opportunities for greater engagement with education and development activities.
LPG presents an opportunity for households to access modern clean burning energy which is vital to achieving a range of social and economic goals relating to poverty, health, education, equality and environmental sustainability.
With Uganda’s nascent oil and gas industry transitioning to the development phase,?realisation of an alternative source of energy ?will go a long way in alleviating energy poverty which is one of the biggest chronic problems faced by Africa.
领英推荐
Make petroleum data more valuable –African oil producing countries urged
The 7th African Petroleum Data Management Forum Conference (APDMF) officially opened at the Commonwealth Resort, Munyonyo – Kampala, with a call to participating countries to make petroleum data more valuable.
The APDMF comprises representatives from key government entities from different countries concerned with policy, regulatory and commercial aspects of the sector.?This forum provides an opportunity for benchmarking best practices while sharing experiences among the countries and institutions represented.
While officially opening the APDMF 2022, Mr. Ernest Rubondo, the Executive Director of the Petroleum Authority of Uganda (PAU) challenged the participants to use the 7th Forum to chat about a way forward on how African countries can make Petroleum Data more valuable and accessible to those that wish to make use of it.
“The increase in data volumes comes with the challenges of efficiently managing the data and efficiently using the data to make decisions hence the important need to leverage on the 4th Industrial Revolution (4IR) technologies such as Internet of Things (IoT), Cloud Computing, and Big Data Analytics, among others. However, leveraging 4IR technologies comes with huge investments in both the technologies and the human resources”, said Mr. Rubondo.
Mr. Rubondo added that; “there was need to make Petroleum Data accessible to researchers, especially from Universities in Africa to undertake more studies that can make the data more valuable to the countries that own it”.
The APDMF is an annual conference organised by the Norwegian Petroleum Directorate (NPD) in conjunction with the Petroleum Regulatory body of the host country.
Mr. Sj?gren Gunnar, the Project Director, NPD, said this this year’s theme, “Seven Years of cooperation in Petroleum Data Management: Looking to the future”, is aimed at helping the countries the NPD cooperates with to leverage on how best they can use their petroleum data.
“Today marks seven years since we started this collaboration. As you can all see, we have come a long way and much as we didn’t meet physically for the last two years because of COVID-19, we are happy to be where it all started”, said Mr. Gunnar.
This year’s ADMF has participants from eight countries that have a corporation agreement for support on data management and storage with the NPD. These include Norway, Ghana, Kenya, Mozambique, Somalia, Sudan, Zanzibar, and Uganda.
“Our philosophy is building capacity and competence for all countries willing to collaborate with us. And this we have done with Uganda and the other countries willing to learn from our experiences on how best to manage their oil resources”, said Mr. Gunnar.
Mr. Gunnar added that when they started collaborating with Uganda, all data was stored in analogue format, but the country was supported to establish a digital database.
Uganda is now in the Development phase of the oil and gas value chain, which includes the setting up of development, production, processing, and transportation facilities. Vast quantities of data are therefore expected from the drilling of over 450 Development wells in the Kingfisher and Tilenga Development projects, as well as from the Refinery and the East African Crude Oil Pipeline projects.?
The data is expected to be transmitted in real-time from the oil fields and infrastructure projects to the planned Real Time Monitoring Centre (RTMC) at the PAU’s offices in Entebbe.
Mr. Rubondo revealed that as the custodian of Uganda’s Petroleum and other related data, the Authority manages over 50 terabytes of data.?A significant portion of this data was acquired during the oil and gas exploration phase.
“The electronic data volumes are expected to increase from the current about 50 Terabytes to 650 Terabytes at the start of oil production in 2025, rising to over 1 Petabyte in 2026”, Mr Rubondo revealed.
Quoting a British mathematician Clive Humby who coined the phrase, “Data is the new oil”, Mr. Rubondo said it is true that the oil industry is heavily reliant on the use of data to inform decision-making. It is also true that just like oil, for data to be useful, it must be processed and applied efficiently.
Mr. Daniel Arthur, a data management specialist from the Petroleum Commission of Ghana applauded Uganda for properly managing and storing its Petroleum Data which has enabled it to progress to the development and production phase.
The team also visited the PAU Data Centre and Core Store in Entebbe as one of the activities for this year’s ADMf.
Uganda’s land acquisition process for oil & gas infrastructure mirrors best industry practices
During the next 5 -10 years, Uganda’s land acquisition processes for oil and gas infrastructure will become the benchmark for best practices for mega projects that require large chunks of land.
The success of any mega infrastructure or construction project, as is in the case of the oil and gas industry world over, which requires a foot print is mirrored in the quality of processes such a comprehensive Resettlement Action Plan (RAP). The RAP encompasses planning (and implementation) for compensation, and resettlement of the Project Affected Persons (PAPs).
Uganda’s RAPs for the oil projects were designed with one overarching principle of the PAPs in mind. To leave the PAPs in a better situation than previously found.
As a result, the implementation of the RAPs have surpassed the minimum standards set under the Ugandan law, the International Financial Corporation (IFC) Performance standards, and other international best practices.
For instance, the Uganda law requires that the owner and land users are fully duly compensated before his/her land is accessed by the project developers. The IFC Performance Standard-5 implores project developers to avoid involuntary resettlement, wherever possible, and to minimize its impact on those displaced through mitigation measures such as fair compensation, and improvements to living conditions. Active community engagement throughout the process is essential.
The land for Uganda’s oil and gas projects is acquired by the Government through the Ministry of Energy and Mineral Development. and the Licensed Oil Companies which will be granted leases. The process is monitored by the Petroleum Authority of Uganda (PAU) to ensure that all laws and regulations have been observed and the PAPs are given adequate compensation.
The land requirements for the three major oil and gas projects are as follows; 1,258 acres for the Kingfisher Development Area (KFDA) operated by CNOOC Uganda Limited (CUL) with a total of 788 PAPs, 2901.4 acres for the Tilenga Field Development Area operated by TotalEnergies E&P B.V Uganda (TEPU) with a total of 5,551 PAPs, and 2,740 acres for the East African Crude Oil Pipeline (EACOP) with 3792 PAPs.
Status of resettlement and compensation
As at end of February 2023, resettlement and compensation stood at 99.5% for KFDA, 94% for Tilenga and 65% for the EACOP Project.
Over the above three projects, 111 resettlement houses have been completed and 93 handed over to PAPs, 242 are under construction and 154 sites handed over to contractors to commence construction.
The land acquisition process for Uganda’s oil projects is taking a careful, social and people centered approach. After a complete due process, which involves surveying, valuation, disclosure of benefits and entitlements, grievance redress, financial literacy training, and compensation. In addition, there are other benefits that a PAP is entitled to.
A PAP is entitled to at least three months’ vacation notice which can only come after the PAP has been fully, and adequately compensated.
The PAPs are also entitled to disturbance allowance of 30%, and a 15% per annum uplift for the period of delay since issuance of the cut-off dates, on top of their compensation for the value of the land and property.
In the case of primary residences, a PAP is given two options: cash or house replacement. A PAP who chooses a house cannot be asked to vacate before the new house is completed. The houses are modern houses, a person who originally had a grass thatched house, gets a modern one at no cost of his or her own. The new homes come furnished with a water tank, solar system, a kitchen, and an outside toilet.
After handing over the house, the PAP is then oriented on how to use the house under the psycho-social support arrangement and given food packages for six months.
Thereafter, livelihood restoration program starts. To comply with the international standards, livelihood restoration plans are required to be in place. Through this, PAPs are given different options to choose from and the activities are supposed to take three (03) years after which post livelihood and land acquisition audits are done.
With complex land tenure systems in Uganda, the process is not devoid of challenges like multiple claims, spectators, fraud, delayed payments, etc.
The process has a multicentred grievance mechanism which is structured like the LC system but involves the PAPs, their leaders, government officers, PAU, consultants, CSOs and oil companies before submission to court. No wonder, that less than 2% of the grievances have required court adjudication.
Africa’s Oil Industry Is Set To Flourish In 2023
Several energy firms have developed oil and gas projects in Africa and the Caribbean in recent years as they shift to focus on low-carbon oil and future-proofing their operations. With mounting pressure to decarbonize, many oil and gas majors have moved away from ageing, carbon-intensive operating sites in favour of developing new projects in non-traditional oil regions.
Meanwhile, African countries are determined to claim their piece of the global energy pie, unwilling to give up valuable natural resources without taking a stake in operations. So, as several states across Africa continue to develop their oil industries, what’s expected for 2023?
As the demand for oil and natural gas continued to rise in the post-pandemic period, we saw governments turn to alternative oil powers for their supply, as countries across the world imposed sanctions on Russian oil. As well as boosting oil production from traditional sites, many countries began to foster relationships with new oil powers, in the hope of ensuring a low-carbon oil supply while the global demand for fossil fuels remains high.
Most of these low-carbon operations are being developed in regions with recent discoveries of huge reserves, such as the Caribbean and Africa, where oil majors are using low-carbon production methods and carbon capture technology to ensure crude output is less harmful to the environment.
At the COP27 climate summit, held in November, in Egypt, African government representatives made it clear that countries across Africa should be allowed to develop their fossil fuel resources to help lift their people out of poverty. As the strong global demand for oil and gas became clear after the U.S. and Europe moved away from Russian energy, African leaders spotted the opportunity to promote the development of low-carbon oil across the continent.
Namibia's petroleum commissioner, Maggy Shino, stated “There are a lot of oil and gas companies present at COP because Africa wants to send a message that we are going to develop all of our energy resources for the benefit of our people because our issue is energy poverty.”