Total E&P Uganda, China National Offshore Oil Corp., and Tullow Uganda launched Front End Engineering Design (FEED) studies for Exploration Area 1 (EA1) in Nwoya and Exploration Area 2 (EA2) in Buliisa district on Tuesday.
During the FEED stage, the selected companies will conduct studies to determine technical issues and estimates for an approximate investment cost. The studies will then enable the three joint venture partners to make a final investment decision.
The companies selected to conduct the FEED studies are Fluor, Technip, and Chicago Bridge & Iron Company (CB&I). Fluor and Technip are from France, while CB&I is from the United States. Fluor is partnering with China Petroleum Engineering and Construction Corporation.
“The companies boast of invaluable experience in the design and construction of remote onshore projects elsewhere in the world, and will bring different engineering design philosophies and expertise for the benefit of the project,” according to a joint statement by the partners.
Adewale Fayemi, general manager for Total E&P Uganda, said the launch of the studies means the exploration project had entered fast-track mode. “At the end of this year the target is to get to FID, the final investment decision,” he said.
At the end of the FEED stage, two of the three contractors will be selected to compete for the Engineering, Procurement and Construction (EPC) contract. The results from the FEED studies will “provide the necessary information to fine tune the cost estimate of the project, identify the specific technical expertise, skills and equipment needed for construction,” the joint statement said.
Mr Fayemi said the EPC stage will “finalise the design for the facilities to be required to process about 200,000 barrels of oil (per day) at the central processing facility.”
“This is a key milestone in our effort to deliver the first oil by 2020,” Irene Muloni, the energy minister said. Ms Muloni added that the oil companies must make a “final investment decision by the end of this year.”
Meanwhile, the energy minister said the government targets “to have identified a lead investor for the refinery” by the end of March. Last year, Ms Muloni said the lead investor in the proposed oil refinery would have been identified by this month, which did not happen.
Ms Muloni said the ministry is negotiating with eight companies out of the 40 that expressed interest in the project. These will be whittled down to three, from which a finalist will be chosen.
Uganda had initially chosen a consortium led by Russia’s RT Global Resources as the lead investor in the refinery, but the company pulled out of negotiations last year. Sources told Uganda Business News in December that the search for a new investor still hinged on Russia, which proposed the state-owned Safinat Group of Companies to replace RT Global Resources.
Safinat is currently constructing a refinery in South Sudan.