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Minister urges oil companies to expedite the signing of the Final Investment Decision (FID) on oil and gas

KIKUUBE – The State Minister for Energy and Mineral Development, Peter Aimat Lokeris has called on oil companies operating in the Albertine grabben to expedite the process of signing Final Investment Decision (FID) to allow the production of oil.

FID is an agreement that International Oil Companies (IOCs) and the government of Uganda through the Uganda National Oil Company (UNOC) mutually agree to the development of the oil fields. The project execution phase should commence shortly after FID with significant expenditure on building the production facilities.

There has been negotiation between the government and oil companies such as Total Energies together with Joint Venture Partners, like China National Offshore Oil Corporation (CNOOC) to sign the FID agreement but up now, it has not been signed.

Speaking during an engagement with CNOOC officials and parliament committee on environment and natural resources in Buhuka parish in Kyangwali sub-county Kikuube district, Lokeris said, that government is ready to sign the FID and was concerned that the oil companies were delaying. The Parliamentary committees have been in Bunyoro region for four days monitoring the progress of oil activities.

He noted that the oil and gas sector is facing competing challenges adding that currently the world is inventing other sources of energy which are environmental friendly.

The minister explained that there is a fear that in the next 20 years, the prices of oil might go down which may make the government to lose money which is investing in the industry.

He says that there is a need for oil companies to take a decision and finalize with the FID to allow the oil and gas production to kick start so that the country can produce the oil when it still has a great market.

Asinasi Nyakato, the Hoima city Woman MP and shadow Minister on environment and natural resources says, as the government moves to the oil and gas production phase, there are some issues that need to be addressed if the sector is to benefit Ugandans.

She noted that during their tour, they discovered that the issue of local content is a serious concern for the oil companies in the ongoing oil and gas activities.

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She added that they also discovered that compensation of people affected by oil activities have not been handled well as many continue to complain of unfair and delayed compensation.

Emily Kugonza, the environment and natural resources committee, vice chairperson called for more sensitization of the public about the industry to prepare them to benefit from sector.

Kugonza, who is also the member of parliament, Buyaja East in Kibaale district, explained that the ongoing oil activities such as the construction of an airport, refinery, oil roads oil pipeline in the region are some of the opportunities that would benefit the local people in the region but most of them lack information on how they can tap in the oil and gas opportunities

Cui Yujun the CNOOC Uganda, Vice President said the company is committed to producing the first drop of oil as soon as possible.

He explained that company is ready to deliver the project at the same time with Total Energies’ Tilenga project located in Bulisa district.

Total Energies plans to have the first oil production by 2025. There was no clarity on when the companies would announce the Final Investment Decision (FID) for the oil development projects.

However, a source close to the company and the Energy Ministry said, CNOOC may not offer its Final Investment Decision (FID) soon as anticipated adding that the company is reluctant as it asks the government to full fill certain conditions for the FID to be announced.

The committee also visited Hoima International Airport (HIA) in Kabaale sub-county, Hoima district. The airport is going to facilitate the construction of the oil refinery in Hoima.

The construction works which kicked off in April 2018 after the government acquired a loan of US $309 million (about Shs1.1 trillion) from Standard Chartered Bank and UK Export Finance for the first phase of the project.

Construction works stand at 65% and the airport is expected to be completed by February 2023.

The project is being executed by SBC Uganda Limited-a joint venture company between UK’s Colas Limited and Shikun and Binui namely SBI International Holdings AG.

While addressing the committee members, Amos Muriisa the project Public Relations Officer (PRO) said that project progress would be above 60% but they were interrupted by the Covid-19 Pandemic.

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