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Bigger Burden For Govt In Oil MOU

The larger burden of the MoU falls onto the government which is expected to construct a 60,000 barrels-per day refinery, approve the studies and surveys for an export pipeline and also to initiate discussions with neighbouring countries for the path of the oil pipeline. The three oil companies in return will give government’s refinery the right of first call on production volumes, supply crude oil for power generation and also endorse and support government’s refinery project.

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Details of the Government and Oil companies Memorandum of understanding have been disclosed by the energy Minister Irene Muloni.

At a press briefing at the Uganda Media centre, Muloni confirmed that Government and the three oil companies – CNOOC Uganda Limited, Tullow Uganda Operations Pty Ltd& Tullow Uganda and Total E&P Uganda had signed an MOU at State-house last night.

The key parts of the MoU revolve around the distribution of crude oil and the plans for commercialisation of oil resources extracted from the Albertine region.

Government will, under the MoU use the extracted oil for power generation, supply a percentage of the crude oil to the refinery and also export crude oil to through an export pipeline to be developed by the oil companies.

The larger burden of the MoU falls onto the government which is expected to construct a 60,000 barrels-per day refinery, approve the studies and surveys for an export pipeline and also to initiate discussions with neighbouring countries for the path of the oil pipeline.

The three oil companies in return will give government’s refinery the right of first call on production volumes, supply crude oil for power generation and also endorse and support government’s refinery project.

Irene Muloni said the MoU is a key instrument on achieving a harmonised process of commercialising Uganda’s oil.

When URN asked her to break down the percentage of oil that the Government will be getting daily from the oil companies, Muloni said the 60,000 barrels per day are their target but the volumes are adjustable according to government’s demands.

//cue in: “The 3.5bn barrels…

Cue out; …. Kind of arrangement”//.

Muloni was flanked by the presidents from Tullow,Total and CNOOC who also pledged to work with the government.

URN has learnt that the MoU will require close to 37 trillion shillings (15bn dollars) to implement and that has been the reason why oil companies and government have taken long to commit themselves.

The MoU has forced the oil companies to accept government’s plan of building a refinery that is expected to be up by 2018. Currently, six consortium companies have been shortlisted to construct the refinery however a lead company is yet to be chosen to run the project. The refinery will start with 30,000 barrels per day and later be modified to the target 60,000 barrels a day.

Oil companies are holding out that they will insist on a crude oil pipeline for exporting oil and that government will only have a first call on the production at the refinery. With the MOU in place, commercialisation and production of Uganda’s oil is on a path.

Uganda’s first oil for export is expected in 2016.

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