Total S.A., the French oil and gas company currently carrying out exploration activities in western Uganda, is acquiring a 10% stake in Uganda’s planned oil refinery, energy minister Irene Muloni told Bloomberg.
The government has been forced to seek alternative partners after its preferred lead investor, Russia’s RT Global Resources, pulled out of negotiations this June. Recent media reports said the South Korean company Uganda had turned to after the collapse of talks with RT, SK Engineering & Construction Group, also walked away from negotiations.
Total was awarded three production licences for Exploration Area 1 of the Albertine Graben region by the energy ministry at the end of August. The company was instrumental in convincing Uganda to build its oil pipeline through Tanzania rather than Kenya, and committed to fund part of the pipeline’s construction.
Tanzania and Kenya also recently acquired stakes in the 60,000-barrel-a-day refinery project, which will cost an estimated $4 billion. Tanzania will take 8% stake, while Kenya will take 2.5%.
Uganda had hoped to build the project through a public-private partnership, with the lead investor taking a 60% stake and the Uganda government – through the Uganda National Oil Company – 40%. It had also offered each East African Community member country an 8% stake from its 40%.
Muloni told Bloomberg that the government is now talking to other investors, but did not identify the companies.
Total said recently that it expects to make a final investment decision on the three fields it is exploring as early as the end of next year. Arnaud Breuillac, the company’s president of Exploration & Production, said the Uganda project is one of “four projects which are quite representative of Total’s future in upstream.”
The delay in getting a lead partner for the refinery project has pushed completion date from 2018 to 2020, according to the energy ministry. It is the latest project whose expected completion has been extended: the date for first oil production was also pushed to 2020 from 2018 because of delays in issuing production licences, which were blamed on the absence of an operational Petroleum Authority.