Uganda gears up for oil production in 2020

Uganda Chamber of Mines and Petroleum in partnership with the Ministry of Energy and Mineral Development held the 5th annual oil and gas convention lasting three days from 9th to 11th April 2019 at Munyonyo Commonwealth Resort.

The convention was established to facilitate business developers, investors and all other stakeholders to forge necessary mutually benefiting partnerships ahead of the long-awaited Final Investment Decision (FID) and signing of the Host Government Agreement (HGA), between Uganda, Tanzania and international oil companies.

The 5th annual oil and gas convention was run under the theme “2019 Decision time: Countdown to commercialization.”

Delegates engaged in a robust programme and agenda concerning key issues necessary for smooth operations, as the country and various stakeholders gear up to 2020.

These included among others; A status update on the Uganda oil and gas sector, exploration licensing of international and national firms, challenges and a roadmap for firms and investors, risk management in the oil and gas sector, onsite capacity building for drivers to acquire skills for the oil and gas sector, key support infrastructure plans for the Uganda Refinery project to mention but a few.

During the discussions held at the convention, investors were advised to follow a simple six step risk mitigation strategy.

Risks can be managed through setting up business context, identification of risks, analysis and qualification of risks, assessing and prioritizing of risks, developing/implementation of risk mitigation strategies and finally monitor and review.

These strategies I believe can be used as all round strategies for anyone looking for a risk management cycle in any line of business.

While addressing the delegates and stakeholders, Mr. Gavin Narainsamy, Senior Vice President, Energy and Power Marsh UK also advised investors on risk management,

“Risks can best be managed by accepting (knowingly identifying and accepting risk), reducing (full awareness of risks prior), avoiding (modifying of the system and lifestyle), spreading (through joint ownerships), and lastly transferring the risk through insurance.”

There has been talk of oil discovery and exploration since the early 2000s in Uganda and one would ponder, why mining hasn’t started or why Uganda hasn’t reaped from the promised linkage spill overs.

Production of Uganda’s “black gold” is expected to begin in 2020 but key support infrastructure has to be put in place to enable smooth operations and attract desired investors.

The HGA which is expected to be signed by May this year by the Presidents of Uganda and Tanzania, will pave way for the construction of the East African Crude Oil Pipeline (EACOP) in June 2019 but will also ensure that locals are employed during construction and that local SMEs supply goods and services.

A 1,445km (897.89 miles) long crude oil pipeline will be constructed from Hoima to Tanga port. It will go a long way in easing transportation of oil from Uganda to the sea port at a speed of 3-6 miles per hour.

A hive of linkages has been created and are still being created because of the oil and gas discovery and preparations for production.

A total of 160,000 jobs was predicted in the oil and gas sector according to the 2013 Industrial Baseline survey.

These jobs will be available for taking by people from different skill sets;

39% will be people with basic skills at entry level (civil engineers, security guards, drilling laborers, catering and hospitality personnel), 38% will be trades and craftsmen (drivers, welders, technicians and some civil engineers too), 17% of the jobs will be taken by technicians (mechanical, instrumentation, electrical, drilling rig technicians and logistics and supply personnel), while 6% will be for graduate engineers (structural, civil and mechanical engineers, central operators, geologists and maintenance engineers).

The education sector has tried to put in place the required facilities for citizens to acquire these skills ahead of 2020.

The education ministry has been able to sign partnerships with international training institutions including the Coventry University of Britain and the Dalhousie University to equip Ugandans with the necessary skills and knowledge to efficiently run the oil and gas sector.

Many more linkages have been created for the people of Uganda to benefit from and translate into higher household incomes through catering and hospitality services, transportation services of the oil and gas products and by-products, agricultural facilities and farms that will supply all the developments set to rise in the Albertine Graben region, housing, tourism and many more.

Ugandans are thus urged to formalize their businesses and take the necessary steps to be part of the supply chain and beneficiaries of vast linkages from the Oil and Gas sector.

By Kainomugisha Caroline

The writer is a Communications Assistant at Government Citizen Interaction Centre (GCIC), Ministry of ICT & National Guidance.