Buyuma Weekly Uganda Energy Roundup(Wk #9) - 2024

Hello There,

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

In an impactful move towards boosting local participation in Uganda's burgeoning oil and gas sector, TotalEnergies EP Uganda, in collaboration with the Ugandan government and private sector partners, unveiled the Industry Enhancement Center (IEC) in Kololo.

This strategic initiative, underpinned by a $2.3 million investment and a three-year partnership with Zoramu Consulting Group and Invest in Africa, is set to revolutionize the capacity and operational efficiency of Ugandan Small and Medium Enterprises (SMEs).

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

TotalEnergies and Uganda Launch $2.3M Centre to Empower SMEs in Oil & Gas Sector

Top executives from TotalEnergies EP Uganda, along with government officials and private sector stakeholders, have inaugurated the Industry Enhancement Center (IEC) in Kololo, Kampala, aimed at bolstering the capacity of Ugandan Small and Medium Enterprises (SMEs).

TotalEnergies awarded a 3-year contract worth $2.3 million to a Joint Venture comprising Zoramu Consulting Group, a Ugandan company, and Invest in Africa to establish the IEC, executives said on Feb.27 at the unveiling ceremony.

Philippe Groueix , the General Manager of TotalEnergies EP Uganda, emphasized that the IEC will offer sector-specific information, tailored business advisory services, training, and capacity-building programs for Ugandan SMEs, enhancing their knowledge and skills within the sector.

The primary goal is to empower them to effectively engage in opportunities within the Oil and Gas supply chain and other sectors.

He said, “Contractor development initiatives are crucial to addressing challenges hindering maximum participation of Ugandan suppliers in the Oil and Gas industry supply chain. These challenges include sector knowledge, HSE practices, certification requirements, technical competencies, and financial modeling. We believe that support for contractor development through the IEC is essential in overcoming these challenges, thus enabling local businesses to thrive in the sector.”

The launch of the IEC follows an Industrial Baseline Survey conducted by TEPU and its Joint Venture partners in 2013, which identified the need to promote national content and capacity building for Ugandan SMEs to enable their meaningful participation in the sector.

Hon Ruth Nankabirwa Ssentamu , the Minister of Energy and Mineral Development, highlighted, “This initiative will equip Ugandan SMEs with the skills and resources necessary to excel within the oil and gas sector and beyond.”

Kenya oil dealers in panic as Uganda picks Tanga port over Mombasa

Kenyan oil dealers are in a crisis mode after Uganda stuck to its guns and started talks with Tanzania to import its fuel through the Port of Tanga instead of the Port of Mombasa following a spat with Nairobi.

Uganda had initially announced that it was in talks with Tanzania to use the Port of Dar es Salaam to import its fuel after Kenya refused to give it concessions to use its pipeline.

But the road distance between Dar es Salaam and Kampala is 1,715.6km, which is 49.5 percent longer that the distance of 1,147.6km between Mombasa and Kampala.

This shorter distance means that Uganda saves up to $35 per cubic meter for using Mombasa instead of Dar.

Hence oil executives in both Kenya and Uganda – had earlier believed that Uganda was bluffing about shifting its import route to Tanzania since?besides being cheaper, the Mombasa port is faster and more efficient than the Dar es Salaam port.

But this has changed after it emerged last week that Uganda and Tanzania are locked in talks that will see the former import fuel via the Port of Tanga, which is far closer to Kampala.

The Petroleum Outlets Association of Kenya (Poak), a lobby for independent oil dealers, says that it would deal a huge blow to local OMCs if Uganda actualises the plan.

“If Uganda indeed moves to the Tanzania route a lot of local oil companies will really suffer because they will lose their biggest market,” said Poak chairman Martin Chomba.

About a third of all fuel imported into Kenya is destined for the transit market, translating to an average of 200 million litres monthly.

Mr Chomba said that a lot of especially small dealers rely on this transit market and would likely be forced to close shop. He further said that Kenya would lose a key source of foreign exchange.

Oil dealers are paid for their fuel exports in US dollars. Uganda last year said it imports fuel worth $2 billion through Kenya annually.

State-owned Kenya Pipeline Company Limited (KPC) would also emerge as a major loser. This is because without the nearly a third of transit market, it would lose millions of shillings in depot tariffs, which are a major source of revenue for KPC.

Currently, oil firms evacuating fuel from KPC’s Nairobi fuel depot pay Ksh2,582.72 ($17.75) per cubic-metre. This will further rise to Ksh2,791.85 ($19.19) per cubic metre in July.

Vivo Energy’s love at Shell campaign: Spreading love and delight across Uganda

In a heartwarming celebration of love, Vivo Energy Uganda recently concluded its highly anticipated Love at Shell campaign, which ran from February 10th to February 24th, 2024.

As part of this exciting campaign, loyal Vivo Energy customers who indulged in purchases above fifty thousand Uganda shillings at Quick Service Restaurants (QSRs) at select Shell stations were treated to an instant surprise of Valentine’s goodies, Movie tickets, spa vouchers, lovely branded shirts and hoodies, HK Studio 8 speakers, while others had the chance to win vouchers for an unforgettable dinner for two, adding an extra layer of romance to the festivities.

The pinnacle of the Love at Shell campaign was an enchanting dinner event held at the prestigious Skyz Hotel in Naguru.

Eighteen lucky couples, selected from among the campaign’s participants, were invited to indulge in a lavish dinner affair accompanied by melodic tunes from a live band.

It was an evening filled with laughter, love, and the unmistakable spirit of Shell.

Hellen Bwengye, the Head of Marketing at Vivo Energy Uganda, extended a warm welcome to all guests at the Skyz Hotel dinner.

She expressed heartfelt gratitude to Shell’s loyal customers for their continuous support and enthusiastic participation in the Love at Shell Campaign.

Bwengye congratulated the winners and emphasized the importance of customer appreciation, emphasizing that at Shell, every customer is considered family.

Among the delighted winners, Steven Senoga won from KFC at Shell Wandegeya and shared his excitement at being rewarded by Shell. He expressed gratitude for the opportunity to enjoy a special evening with his wife at Skyz Hotel.

Uganda Targets $5bn Per Annum from Kabalega Industrial Park

The Hoima-based Kabalega Industrial Park (KIP) will contribute about $4.9bn per annum to the national Gross Development Product (GDP), Uganda National Oil Company Limited (UNOC) revealed.

This figure excludes revenues generated by the planned oil refinery in the area.

UNOC, through the Uganda Refinery Holding Company, leads the development, operationalization, and management on KIP with a strategic joint venture partner – 51% shareholding for UNOC.?

KIP, which sits on a 25.97 square meter expansive land, is among UNOC’s key midstream projects.

KIP comprises Uganda’s Kabaale International Airport which is under construction, the crude Oil Export Hub-beginning of the East African Crude Oil Pipeline (EACOP); Uganda greenfield Refinery; polymer and fertilizer industries; light /medium industries; agro-processors; warehousing and Logistics.?

Other land uses in the park will include commercial, retail, Health Centre IV, and residential spaces.

UNOC said KIP will also help Uganda in adding up to 11.9 bn per annum to the National Capital Formation.

The park is also expected to improve Uganda’s Balance of Payments by USD 849 million per annum; create a fiscal impact of USD 1.2 bn per annum and create 35,000 job opportunities.

Officials say construction of the Kabaale International Airport is at about 95% completion phase.

Uganda is working around the clock to build its ?60,000 barrels-per-day crude oil refinery, an ambitious project expected to create over 50,000 jobs and wean the land-locked country off petroleum product imports for over three decades.?

The Front-End Engineering Design (FEED) for the Refinery was completed and the Environmental and Social Impact Assessment (ESIA) for the refinery is near completion.

“The process of acquiring a Joint Venture partner who will partner with UNOC to run the Park in on,” said UNOC, adding, “A proposal submitted by COEGA Development Corporation SA was evaluated and is moving to negotiations.”?

“The land allocation policy is also being finalized to enable potential investors to apply for Land in the Park. A paper will be resubmitted to Cabinet for approval on the operationalization of the Policy.”

Final Refinery Funding Negotiations Announced Among Other Positive Developments in Uganda’s Oil and Gas Sector

Final negotiations for the financing and construction of Uganda’s USD 4 billion domestic refinery began in January?after Alpha MBM Investments from the United Arab Emirates was chosen by the government of Uganda as preferred bidder.

Minister Nankabirwa also announced infrastructure at the Kingfisher Development Area, one of the two major production areas already licensed, is well ahead of schedule having reached 21 per cent progress in December?rather than the 17 per cent planned.

Other progress milestones included 95 per cent construction of Kabalega Airport, a logistics hub for the oil and gas project, and which on completion will become the country’s second international airport after Entebbe near Kampala, Uganda’s capital And the construction of the refinery at Hoima, which will process 60,000 barrels of oil daily, in the west of the country will transform.

Uganda’s energy security profile as it will no longer rely on neighbouring countries for transshipment of critical fuel supplies.

The refinery will also drive a key part of Uganda’s Energy Transition Plan, as it will produce the Liquefied Petroleum Gas that is a key component of the country’s ‘clean cooking’ initiative.

The Ministry issued a License for the construction of the Kingfisher Development Area Natural Gas conversion facility in Kikuube District, Uganda to CNOOC (U) Limited.

The license is for a period of five (5) years and the Company is expected to produce over 20,000 tonnes annually at its peak.

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