Status of Uganda's oil & gas Sector Status of Uganda's oil & - - PowerPoint PPT Presentation

Kolping Hotel, MASINDI July 7, 2015

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Presented at:

A WORKSHOP ORGANIZED BY MYJ FOR NWOYA STAKEHOLDERS

By:

Catherine Bekunda Directorate of Petroleum

Status of Uganda's oil & gas Sector Status of Uganda's oil & gas Sector Towards the Development Stage, Opportunities Towards the Development Stage, Opportunities for Ugandans for Ugandans

Petroleum Exploration and Production Department

PRESENTATION OUTLINE

• 1. Introduction
• 2. Update on specific projects
• 3. Development of Uganda’s Discoveries.
• 4. Projects in the Development Stage
• 5. Opportunities for Ugandans
• 6. Challenges and Way forward
• 7. Conclusion

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Petroleum Exploration and Production Department

• 1. INTRODUCTION
• 1. INTRODUCTION

1.1 Petroleum Value Chain;

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LICENSING EXPLORATION DEVELOPMENT PRODUCTION TRANSPORTATION REFINING GAS PROCESSING DISTRIBUTION MARKETING SALES UPSTREAM MIDSTREAM DOWNSTREAM

Petroleum Exploration and Production Department

2.Update on specific projects (1) 2.Update on specific projects (1)

2.1 Licensing

• In February 2015, Uganda announced a new competitive licensing

round

• The round will cover six blocks namely:

Turaco Block in Ntoroko district-425 Sq.Km Kanywantaba Block in Ntoroko district-344 Sq.Km Taitai & Karuka Block in Buliisa district – 565 Sq.Km Ngassa Block in Hoima district – 416 Sq.Km Ngaji Block in Kanungu and Rukungiri districts – 895 Sq. Km Mvule Block in Moyo and Yumbe districts – 344 Sq. Km

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companies have submitted statement

• f

qualification to Government for evaluation.

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2.Update on specific projects (2) 2.Update on specific projects (2)

2.2 Land Access and Acquisition Process The land access and acquisition procedures for oil and gas activities is dictated by the phase in the value chain as follows;

• Exploration phase: during this phase land is required on a

temporary basis for seismic surveys, well drilling, access roads among others. Hence land owners or users are paid rent for deprivation of their land use.

• Development and Production phases: These phases require

land to be acquired for transportation corridors, pipelines, central processing facilities, well pads, camps among others. This requires land to be acquired on a long term basis. Consequently, resettlement and compensation is necessitated.

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2.Update on specific projects (3) 2.Update on specific projects (3)

2.2.1 Ongoing Resettlement and Compensation Activities a) Land acquisition for the refinery

• Acquisition of 29.57km2of land in Kabaale, Buseruka in Hoima for

the construction of an oil refinery nearing end.

• 95% of the PAPs who opted for cash compensation already paid.
• 533 acres for resettlement of the 93 PAPs has been acquired
• Physical planning for the resettlement land were finalized by

Ministry of Lands Housing and Urban Development

• Cadastral survey and demarcation of the individual parcels for the

PAPs is now ongoing

• 93 PAPs will have access to their individual land parcels and will

be free to commence agricultural activities

• Finalising procurement of a contractor to construct the houses

and the social infrastructure for those to be resettled.

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2.Update on specific projects (4) 2.Update on specific projects (4)

b) Land acquisition in the Kingfisher Development Area

• CNOOC the operator of the Kingfisher Development Area commenced the

process of acquiring land for the development of infrastructure. The land is for well pads, Central processing facility, camps, access roads, airstrip, escarpment road, among others. c) Temporary land access and compensation in EA 1/1A & EA 2

• Total E & P Uganda, the operator of EA 1 /1A and Tullow Uganda Operations Ltd

, the operator of EA 2 have had temporary access to land. Hence land owners or users are paid rent for deprivation of their land use . This has been the case mainly for land hosting Exploration and appraisal wells, access roads, and camps.

• Retrospective rental compensation is on going in EA 2 Buliisa area, Completed in

EA 1/1A except over Mpyo 6, Ngiri 7, Ngiri 4, Ngiri 1 and Gunya-2 well pads because of land ownership disputes

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2.Update on specific projects (5)

Other Routes for Crude Export Pipeline under consideration South Tanzania Route to Tanga North Kenya Route to Ras Tenewi near Lamu South Kenya Route to Las Ngomeni near Mombasa

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12 m of wide strip of land centered along the pipeline route to be permanently acquired. Can be wider for future pipeline developments 24 m of wide strip of land required temporarily for construction period (movement of materials and equipment) Government has procured a consultant to carry out Detailed Route Survey and Environmental Baseline Study for Hoima –Kampala product Pipeline RAP Study and its implementation

2.Update on specific projects (6) 2.Update on specific projects (6)

b) Field development

• Land will be required for the development of facilities

in the different fields for the production of oil and gas.

• The fields that are on stream to progress to

development are EA 1 and EA 2. The land requirement for permanent take is for the construction of a central processing facility, pipelines, flow lines, access roads, camps and well pads.

• TUOP and TEPU have procured a consultant to

undertake the RAP studies

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Petroleum Exploration and Production Department

• 3. DEVELOPMENT OF UGANDA’S DISCOVERIES

. DEVELOPMENT OF UGANDA’S DISCOVERIES

3.1 Discoveries;

Total of 21 discoveries

made so far.

6.5b bbl of resources.

• Estim. 1.4b recoverable.

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Petroleum Exploration and Production Department

3 . Development of Uganda’s Discoveries . Development of Uganda’s Discoveries (2)

(2)

3.2 Status of the 21 Discoveries;

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4 discoveries returned to Government; Turaco, Ngassa, Karuka and Taitai. 1 Production License issued to CNOOC Uganda Ltd; Kingfisher. 12 Applications for Production Licence being reviewed; KW, KNNN, MNW by Tullow and Ngiri, Jobi-Rii by Total E&P. 4 FDPs submitted in December 2014; Gunya, Mpyo, Jobi East and Lyec by Total E&P.

Only Kingfisher Discovery into Development stage today.

Petroleum Exploration and Production Department

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a) Refinery Development 60kbopd refinery phased starting with 30kbopd. PPP between GoU and lead investor with option for EAC partner states to participate. Feasibility study finalized and Land acquisition ongoing. Lead investor selection process in final stages with RT Global Resources as the best preferred bidder and SK Energy resources as the alternate preferred bidder.

4 . PROJECTS IN DEVELOPMENT STAGE . PROJECTS IN DEVELOPMENT STAGE

4.1 Activities planned during Development

Anticipated that construction will start 2015 and first phase of refinery will be ready 2018. Over 5,000 workers expected during construction and about 500 during normal operations. Lots of imports expected for construction.

Petroleum Exploration and Production Department

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b) Upstream Facilities Construction - CPF Two CPFs expected. One in Kingfisher and another in Buliisa. Kingfisher CPF to process crude from Kingfisher and that from Kaiso –Tonya.

4 . Projects in Development Stage . Projects in Development Stage (2)

(2) CPF will generate about 35MW of electricity from associated gas for heating of pipelines, pumping of crude, well power, general CPF and camp requirements. Kingfisher excess associated gas to be used in LPG and power to National grid.

Petroleum Exploration and Production Department

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Buliisa CPF to process crude from South and North of the Nile. To be shared between Tullow and Total with Total as operator. CPF to have four trains to cater for different properties of Crude.

4 . Projects in Development Stage . Projects in Development Stage (3)

(3) Power to be generated at location estimated at 70MW for heating of pipelines, pumping of crude, well power, general CPF and camp requirements. Studies on use of excess associated gas is ongoing. Storage tanks for crude must be built.

Petroleum Exploration and Production Department

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c) Other Upstream Facilities Construction Feeder pipelines from different wells to CPF Temporary and permanent operational camps Water intake facilities Well pads Above ground installations Lots of manpower will be required during these projects.

4 . Projects in Development Stage . Projects in Development Stage (4)

(4) d) Export pipeline Construction 1/3 in Uganda and 2/3 in Kenya of the 1300km pipeline About 600m of pipeline installation per day. Minimum of three crews for construction.

Petroleum Exploration and Production Department

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e) Drilling About 700 wells expected in total Deviated wells with many wells at one pad Rigs sliding with 9 rigs at peak 80 people per rig on average. Drilling continuous starting 2016.

4 . Projects in Development Stage . Projects in Development Stage (5)

(5) f) Operations About 6 months of mobilization before production. Manpower required for operating CPF, Well intervention and work over and monitoring reservoir during production Export pipeline operations will need about 200 people.

Petroleum Exploration and Production Department

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5 . OPPORTUNITIES FOR UGANDANS . OPPORTUNITIES FOR UGANDANS

5.1 The National Oil and Gas Policy

Policy Goal:

“To use the country’s oil and gas resources to contribute to early achievement

• f poverty eradication and create lasting value to society.”

Policy has ten objectives, each with strategies and actions to meet the

• bjective.

Policy available on website: www.petroleum.go.ug

The policy has two main objectives advocating for National Content and Capacity Building;

a) Provide for optimum National Participation in the oil and gas sector. b) Development and Maintenance of National Skills and Expertise.

Petroleum Exploration and Production Department

5.2 Legal and Regulatory Framework

1.The Petroleum (Exploration, Development and Production) Act, 2013. Sections 124-127 address state participation,

• pportunities

for Ugandans, training, employment and technological transfer. 2.The Petroleum (Refining, Gas Processing and Conversion, Transmission and Storage) Act, 2013. Sections:52-55 address the same issues relating to participation and national content. 3.The development of upstream and midstream regulations is ongoing.

• 4. Model Production Sharing Agreements (PSAs) being revised

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5 . Opportunities for Ugandans . Opportunities for Ugandans (2)

(2)

Petroleum Exploration and Production Department

d) Oil and Gas Local service providers Association. e) Increased employment of Ugandans in the Sector through enforcement of the provisions of the Law and the PSAs.

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5.3 Other Efforts towards National Content development a) Government has concluded a study on the opportunities and challenges for Ugandans’ participation in the oil and gas sector. b) A National Content Policy and Plan is being formulated. c) A National Content section exists within Ministry of Energy.

5 . Opportunities for Ugandans . Opportunities for Ugandans (3)

(3)

Petroleum Exploration and Production Department

Other Efforts…. f) Efforts in supporting local companies to participate in the Sector The Petroleum Laws & PSAs have clear provisions requiring the Oil companies to give preference to local goods and services. Procurement procedures of the operating oil companies. Review of contracts signed between the Oil companies and their subcontracts. Provision of Constant feedback regarding the demands of the Sector.

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5 . Opportunities for Ugandans . Opportunities for Ugandans (4)

(4)

Petroleum Exploration and Production Department

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Start of Uganda Petroleum Institute Kigumba artisans and technicians training Most of the pioneer Graduates have been absorbed in the Sector The second intake completed their hands on training abroad and have got certification. With support from donors, Plans are underway to acquire equipment for UPIK Undergraduate and post graduate studies in Petroleum Geoscience at Makerere University. First intake graduated in January 2014 A petroleum institute will be set up in Nwoya to be a centre of excellence in oil and gas Kichwamba Technical Institute will also be upgraded to offer oil and gas courses. Post graduate studies in Petroleum Geoscience at Makerere University commenced in

2012/2013, supported by the University of Bergen, Norway

Private institutions are encouraged to introduce high quality petroleum related

• programmes. 3 private Universities now offer petroleum training & 3 petroleum

institutions have been opened.

Capacity Building for Skills Development in the Country

5 . Opportunities for . Opportunities for Ugandans Ugandans (5)

(5)

Petroleum Exploration and Production Department

Support to Non Oil Sectors

Government through the NOGP recognised that; a) the Oil and Gas Sector has significant impact

• n other existing sectors

b) It can be an important engine for poverty reduction and sustainable development. c) the revenue from the Sector shall be invested in non-Oil and Gas Sectors specifically for;

• Infrastructure Development
• Support to Agriculture

These are expected to lead to higher growth rates of the economy,

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Ongoing construction works for the 92km Hoima-Buseruka-Kaiso Tonya road which is due to be completed during 2015.

5 . Opportunities for Ugandans . Opportunities for Ugandans (6)

(6)

Petroleum Exploration and Production Department

Costs for implementation of national content are high especially in the beginning. There is a shortage of skilled workforce world over but this is more severe in the region and Uganda. There are limited training institutions that are well equipped. Sometimes, these institutions are attracted towards making money. The fall in price of oil has reduced investment in the sector world wide.

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• 6. CHALLENGES AND WAY FORWARD

. CHALLENGES AND WAY FORWARD

6.1 Challenges

Petroleum Exploration and Production Department

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• 1. 117 well bores have been drilled. We expect to have about 700 wells

drilled between 2016 and 2024.

• 2. Total development costs estimated at over US$10bn.
• 3. Big opportunity for Ugandans to supply and participate in the new

sector.

• 4. Licensed companies undertook a study on capacity of Ugandans to

supply the industry and the challenges.

• 5. Companies have been allowed budgets to widely inform Ugandans

about this study.

• 6. Government has put in place laws that favor nationals, a policy is

being finalized and regulations being updated.

• 7. CONCLUSION

. CONCLUSION

Petroleum Exploration and Production Department

Thank You

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Further Information; DIRECTOR,PETROLEUM pepdebb@petroleum.go.ug www.petroleum.go.ug