CNOOC restores hope on continued Final Investment Decision (FID) demands
HOIMA – The China National Offshore Oil Corporation [CNOOC] Uganda Ltd has restored hope to the government and Ugandans interested in tapping from the oil and gas sector after Company officials declared that the Final Investment Decision [FID] will be ready next year.
FID is the point in the capital project planning process when the decision to make major financial commitments is taken by International Oil Companies. At the FID point, major equipment orders are placed and contracts are signed by Engineering, Procurement, and Construction [EPC] companies.
The project execution phase commences shortly after the FID with significant expenditure on building the production facilities.
There has been negotiation between government and oil companies such as TotalEnergies with Joint Venture Partners, China National Offshore Oil Corporation [CNOOC] to sign the FID but up to now, nothing has been done.
Recently, the State Minister for Energy and Mineral Development, Peter Aimat Lokeris criticized oil companies operating in the Albertine graben for the delayed signing of the FID, adding that the government was ready to sign the FID and blamed the oil companies for the delays.
He explained that there is a fear that in the next 20 years the prices of oil might go down which may make the government lose money that is investing in the industry.
However, speaking during the annual CNOOC Uganda media engagement at Kingfisher Development Area in Buhuka parish Kikuube District, the Head of Corporate Affairs, Zakaliya Lubega said that the company is determined to deliver the FID by 2022.
The FID is not an event but rather a process that has been ongoing across the board for all partners, where you want to acquire the land, have Environment and Social Impact Assessment [ESIA] study undertaken and approved, go through procurement processes for the big contracts, all these take a lot of time and resources.
He said they have been waiting for the government to put in place enabling laws to ensure that there is proper legislation under which the companies would operate.
We were going through that process to ensure that when we make an announcement of FID, nothing is going to stop us. And now that everything seems to be ready, we are one leg into FID and the other leg is closely following.”
The pronouncement comes three weeks after parliament passed the East African Crude Oil Pipeline Special Provisions Bill 2021, and the amendments of both the Income Tax Act and the Public Finance Management Act [PFMA].
Lubega told reporters that some contracts in KingFisher Development Area [KFDA] like in well pad development have already been awarded while others are pending approval after being given Conditional Letters of Awards.
He added that the contract of well pad development has already been awarded and the contractor will be mobilizing the site soon.
Once announced, the FID will unlock a $15b investment by CNOOC and Total in the next 3 to 5 years.
“Technically, we are into development. When we make the announcement early next year, in the next 36 to 40 months, we shall have oil out but our main target is 2025,” Lubega revealed.
He noted that oil is still in the ground and expressed concern over some people speculating that oil is being stolen, adding that these are propagandists who want to mislead the public.
CNOOC is taking the Kingfisher oil field in Buhuka parish Kyangwali sub-county in Kikuube district onshore of Lake Albert.
Kingfisher field development area is spread over approximately 344km2 in the Lake Albert Rift Basin in western Uganda.
The oil field is situated on the eastern bank of Lake Albert, which acts as a border between Uganda and the Democratic Republic of the Congo. It was discovered by the Kingfisher-1 wildcat well in 2006.
