Buyuma Weekly Uganda Energy Roundup(Wk 21)

Hello There,

Welcome to this week's?Buyuma Ugandan oil and gas weekly update?covering?the latest energy?news that made waves in Uganda.

The Tanzania Ports Authority (TPA) will facilitate EACOP's development.?

Because the East African Crude Oil Pipeline Project (EACOP) will transport crude oil from Uganda’s Lake Albert oilfields to the Port of Tanga before the product is sold onwards to world markets, TPA has a big role to play in ensuring the successful construction and operations of the pipeline.

Below are?updates that made the headlines in Uganda's Oil and Gas sector

TPA will facilitate EACOP development

Dr. George Fasha (the Director of Marketing & Public Relations, TPA)

At the recent 10th East African Petroleum Conference and Exhibition 2023 (EAPCE’23) in Kampala (9th and 11th May, 2023) I was asked by the moderator of a panel I was part of, about how ready the Tanzania Ports Authority (TPA) was in regards to facilitating petroleum production in Uganda.

Very ready, was my response before going ahead to expound my point further – which I will try to reproduce here in?this article, albeit with a few extra details.

The Tanzania Ports Authority (TPA) is the landlord and operator of a diverse system of sea and inland waterways on Tanzania's mainland including the major seaports of Dar es Salaam and Tanga plus the lake ports on Lake Victoria, Tanganyika, and Nyasa. Dar Es Salaam Port.

These ports serve the Tanzania hinterland and the land-linked countries of Uganda, Democratic Republic of Congo (DRC), Burundi, Rwanda, Zambia, Malawi and Zimbabwe.

Because the East African Crude Oil Pipeline Project (EACOP) will transport crude oil from Uganda’s Lake Albert oilfields to the Port of Tanga before the product is sold onwards to world markets, TPA has a big role to play in ensuring the successful construction and operations of the pipeline.

But even before the oil is transported, a lot of the imported material to use in the construction of the 1,443km pipeline (296 km in Uganda and 1147km in Tanzania) will come through the Tanzania ports.

The Port of Dar es Salaam alone is expected to handle over 90% of the equipment and material imported for the construction of EACOP.

The Port has a total of 12 berths, with a quay length of 2,600 meters and an intrinsic capacity to handle more than 18 million tons of cargo. By 2025 it will improve its capacity to 28 million tons.

Uganda plans to start oil production in 2025, and I am confident that TPA is ready to facilitate both the construction of EACOP as well as provide a seamless gateway for Uganda’s oil and gas projects.

With help from the World Bank the TPA is implementing the Dar es Salaam Maritime Gateway Project (DMGP) – a massive undertaking that has greatly transformed the Port.

In a nutshell, the DMGP aims at improving physical infrastructure while supporting the institutional strengthening of TPA. This includes the construction of a roll-on, roll-off (RoRo) vessel terminal – which is already in use; deepening and strengthening of existing berths (1 to 7 and 8 to 11) to 14.5 metres plus deepening and widening the entrance channel and turning basin in order to handle Post-Panamax vessels (extra-large ships).

The rail linkages and platform at the port have also been improved while a new terminal jetty and multipurpose berth at Gerezani Creek have been constructed.

The DMGP has also been instrumental in addressing the skilling gap through various capacity-building programs which has seen many of our people enhance their skillset, attain international standards and become experts in handling different kinds of vessels and cargo.

The project has further facilitated the procurement of management information systems, Terminal Operating Systems, and a Port Community System.

All this is aimed at doubling the Port’s capacity; halving vessel waiting time while also reducing berth occupancy and increasing operational productivity at the Port.

Our modern equipment and machinery like the Ship to Shore Gantry, Rubber Tyred Gantry, Rail Mounted Gantry cranes, forklifts, terminal trucks and trailers will cope with the different types of oil and gas cargo ranging from containerized, break-bulk and abnormal loads or out-of-gauge cargo.

We are expecting lots of pipe work for the EACOP project and have as a result built a system to efficiently manage the 18-metre pipes from the vessels. The discharge rate of the crane to quayside is estimated at 40 seconds per pipe; so we shall be in?position to clear a load of 5,500 pipes within 5 days of vessel arrival.

For Tanga where the EACOP terminates, a marine storage terminal will be constructed in Chongoleani and an oil jetty at Tanga Port.

The expansion of the entrance channel, an increase of the draft at the turning basin and procurement of modern equipment was completed in Phase I of Tanga Port’s infrastructure enhancement.

Phase II which includes deepening the two berths to 450m is 95% complete.

Upon completion, Tanga’s capacity will increase from the current 750,000 tons of cargo to 3 million tons.

Beyond Oil, Uganda is a very important market; that is why the TPA opened up a liaison office in Kampala – after years of working through a proxy. To serve Uganda well an efficient multimodal transport system must be in place.

In partnership with the Central Corridor Transport Transit Facilitation Agency (CCTTFA), we have improved the capacity on both rail and via Lake Victoria.

Forty wagons have been rehabilitated for both Uganda Railways Corporation (20) and Tanzania Railways Corporation (20). Transport costs are significantly dropping as a result. We are looking at $74.80 and $80.80 per tonne from Dar es Salaam to Portbell and Jinja respectively in a period of 5 days.

The road user fees challenge has been solved by agreeing to a flat COMESA rate of $10/100km along the Central Corridor – a flexible rate where transporters only pay for the distanced plied. Ugandan-registered?trucks currently pay the least in the region.

We have also seen a substantial decrease in roadblocks from 10 to 3 with a vehicle cleared in less than 5 minutes. All the weigh bridges along the route are weigh-in-motion so there is no need to stop for physical verification.

Besides, Ugandan-bound cargo is guaranteed a 30-day free storage period with a dedicated Ugandan shade at the Port of Dar es Salaam. Other sectors like agriculture, manufacturing, trade and retail and construction are also facilitated by TPA.

In the 1970s, when the railway was fully functional a big percentage of Uganda's exports, especially coffee were handled by the Port of Dar es Salaam. Dar es Salam currently handles 3% of Ugandan traffic; and with the various interventions being undertaken we hope to grow these volumes to 20% by 2027.

Uganda is ready to work with us; so it is on us to ensure we put our house in order to serve Uganda better.

Eng Batebe: Uganda Expects More Oil in Western Uganda, Karamoja

Uganda expects to discover more oil in the western Albertine Graben and Karamoja that would see the country join Africa’s top oil producers.?

“Our reserves at 6.4 billion barrels of which 1.4 billion is recoverable are quite substantial to support our oil and gas development,” said Energy Ministry Permanent Secretary, Eng Irene Batebe.

She spoke at the commissioning of the drilling of oil wells at the Kingfisher project in Kukuube district.

The Kingfisher area is a Joint venture partnership where Uganda National Oil Company (UNOC) owns 15% of the joint venture.?

The Chinese company, CNOOC is a 28.3% shareholder and Total Energies owns a 56.7% shareholding. CNOOC is the operator of the Kingfisher project.?

“And for us as a country, we are now about to join the largest producers in Africa – following behind Angola, Nigeria, Algeria, Libya and Egypt,” said Batebe.

Batebe said the government is also spearheading the development of the oil refinery to add value to petroleum resources “to ensure we benefit from byproducts such as?gas, fertilizers and ammonium nitrate production.”

She said suitable transport solutions that will give value to Uganda are being put in place including a network of pipelines to evacuate refined products from industrial parks to Hoima and Mpigi.

“We are also working on another pipeline to transport crude oil from here to Kabaale Industrial Park,” said Batebe.

She further said the government continued to work with Tanzania to import natural gas to supplement natural gas resources.?

The Kingfisher project in Kikuube district is among the various projects executed in Uganda’s oil sector. Others include; Tilenga project and the construction of the East African Crude Oil Pipeline (EACOP) in Uganda and Tanzania.

The Kingfisher project operated by China National Offshore Oil Corporation (CNOOC) and the Tilenga project operated by Total Energies is expected to start producing oil in 2025.

Products from the oil fields will be transported to the port of Tanga in Tanzania through the cross-border oil pipeline, EACOP whose shareholders are TotalEnergies with 62%, Uganda through Uganda National Oil Company (UNOC) at 15%, Tanzania through Petroleum Development Corporation at 15% and CNOOC at 8%.

Uganda signs oil exploration deal with a unit of Australia's DGR Global

Uganda?signed a production-sharing agreement (PSA) with a unit of Australian firm DGR Global (DGR.AX) on Friday for the exploration of oil in its west.

DGR Energy Turaco Uganda Limited will explore the Turaco block, a swathe of 637 sq km (246 sq miles) in the Albertine Rift basin that straddles the African nation's border with the Democratic Republic of Congo.

Turaco was one of five blocks put up for auction in Uganda's second licensing round launched in 2019.

"This licence marks a significant milestone for the competitive second licensing round," Energy Minister Ruth Nankabirwa said in the capital, Kampala.

Implementation of the round had been delayed by the COVID-19 pandemic as travel curbs affected the bidding and negotiation stages, she added.

The deal gives DGR Energy four years of exploration.

Uganda discovered commercial hydrocarbon deposits in 2006 and reserves are estimated at 6.5 billion barrels. Commercial production is expected to commence in early 2025.

All the existing development fields are owned by France's TotalEnergies (TTEF.PA), China's CNOOC (0883.HK) and Uganda National Oil Company (UNOC).

Commercial production is expected to commence in early 2025.

Armour Energy Uganda Ltd, another unit of DGR Global, got a two-year extension of its licence for the Kanywataba exploration area on Friday. It has been exploring there since 2017.

Uganda Signs Deals for Turaco, Kanywataba Exploration

The Ugandan government has signed two deals paving the way for new exploration activities in the Turaco Block and expansion of existing drilling works in the Kanywataba contract area.

The deals include a new production sharing agreement with DGR Energy Turaco Uganda to explore the 637km2 Turaco block in the Albertine Rift basin and an addendum with Armour Energy Uganda for exploration in the Kanywataba contract area.

Exploration in the Turaco block will be conducted over a period of four years while in the Kanywataba contract area, activities will be conducted for an additional two years.

Commenting on the agreements, H.E Ruth Nankabirwa, Minister of Energy & Mineral Development, stated that the two deals mark a “significant milestone in the development of Uganda’s oil and gas sector and highlights Government of Uganda’s commitment to working with the different stakeholders in the sector to ensure the sustainable management of the country’s natural resources.”

The deals come at a time Uganda seeks to fast track the development and exploitation of its estimated 6.5 billion barrels of oil reserves, while accelerating exploration activities and the buildup of storage and transportation infrastructure such as the East African Crude Oil Pipeline.

The East African country is expected to produce its first commercial hydrocarbons in 2025.

Museveni, Suluhu commission joint 14MW hydropower plant in Uganda

President Museveni and his Tanzanian counterpart Samia Suluhu yesterday commissioned the 14-Megawatt Kikagate-Murongo Hydro power project that is expected to bolster development between the two countries.

The $100m power project was constructed by the Berkeley Energy company under the Public-Private Partnership (PPP) arrangement between the two sister countries.

While commissioning the project that was powered on in Isingiro District yesterday, Museveni tasked African leaders and technocrats to stop being self-centred, saying this sabotages progression of the continent.

“Political and bureaucratic classes of Africa must wake up or be overtaken by the determined people who want development. The potential for development is there but most times these people are in arguments,” he said.

Kikagati-Murongo is located along the Kagera River at the border of Uganda and Tanzania.

The project that started in 2017 will benefit 60,000 homes in the two countries as Berkeley collects tariffs for the next 20 years before handing over the facility for further management by the two governments.

Museveni said the project should have started in 2005 but the two countries could not agree on how the electricity would be shared among themselves.

He further said electricity helps in steering development across the East African region, but people get selfish when they start arguing about who takes what share of electricity.

“I’m not part of this argument of who takes more power; if Tanzania needs the power more, they can take it because they will not take it free. What is the problem? So, if they wanted two megawatts originally and now, they want four, I will grant them. If they want all 16 megawatts, they can as well take it but they will pay.” he said.

Museveni and his Tanzanian counterpart Samia Suluhu Hassan commissioned the Kikagati-Murongo Hydropower Plant in Isingiro District on May 25, 2023. The 14 Megawatts cross-border dam is located on the Kagera River, the largest tributary of Lake Victoria, which serves as the natural border between Tanzania and Uganda.

Museveni said the two countries had failed to utilise the potential of River Kagera for a long time yet there were opportunities to be exploited to develop the two countries, which attracted the government of Rwanda in a similar project.

This is one of the first cross-border huge infrastructural projects between Uganda and Tanzania.

“It’s good that we’re beginning to utilise the potential of the Kagera River,” Museveni said, adding: “The 11 miles downstream from the location is Nshungezi where there are 38 megawatts to benefit Uganda, Rwanda and Tanzania.”

“It’s a big honour to have President Samia Suluhu Hassan come here for the first time in this area. You have been to other parts of Uganda, but never here. We are very lucky, and I welcome you here,” he added.

The plant will sell its power to the national grid and consumers will pay $8.5 cents per kilowatt hour for the electricity generated. The cost, according to Museveni, is too high if it’s to serve the intended purpose and implored the developers to make it cheaper for people.

“This price of 8.5 cents per unit is not a Christian idea because we’re insisting that power especially for manufacturing should be about 5 cents,” Museveni said, mentioning dams such as Karuma and Isimba where the production cost is 4.8 cents per unit and Bujagaali which started at 13 cents and has now come to 8.3 cents per unit.

In her remarks, President Suluhu was optimistic that the project will improve the historical relations and the bi-lateral trade between the two countries.

“I’m always happy to note that our historical fraternal relations continue to improve day by day and of course, there is wider room to further make improvements of our relationship and cooperation particularly in areas of trade and investment as well as cultural and social engagements,” she said.

She also applauded Mr Museveni’s vision of kick-starting the construction of a hydropower dam in Isingiro, which on completion, will contribute to the economic growth of the two countries.

“I must say that the power generated here shall improve a lot of things. It is going to improve trade and investment in this region. It’s going to improve transportation of people and goods, social services, sound health services, contemporary teaching modalities are going to be done here, because power is here,” he said.

She said her government is committed to strengthening and deepening brotherly friendship and cooperation with Uganda.

That's it for this week. Until next time, Cheers!