Tullow: We are Not Interested In Uganda Oil Export Pipeline Investment

3302 Views Kampala, Uganda

In short
However, Tullow Oil PLC has made a u turn saying it has no plans to invest in the proposed Uganda oil export pipeline.

In February last year, oil companies Total E&P Uganda, Tullow Operations Uganda Pty and CNOOC Uganda signed a Memorandum of Understanding (MOU) with government, where they committed themselves to the development of crude oil export pipeline.
The export pipeline is to transport crude oil from the oil fields in the Albertine region to Kenya. However, Tullow Oil PLC has made a u turn saying it has no plans to invest in the proposed Uganda oil export pipeline. Paul McDade, the Chief Commercial Officer, Tullow Oil PLC disclosed while releasing the 2013 financial results of the company. He told this to investment bankers on Wednesday evening, proceedings that URN followed via video link.

//Cue in: We’ve always been pretty…
Cue out: …pipeline that crosses Uganda and one that crosses Kenya//
Tullow has never invested in a pipeline or refinery considering that it is only until 2008 that they became an oil producer. Prior to that, they were strictly exploring for oil. The only commitment Tullow is making is towards a study known as “Pre-FEED study” that determines the cost, design and exact route of the oil pipeline.

The oil companies had been haggling with government that was only inclined to strictly having a refinery. It was only when the MOU was signed that government left the construction of a pipeline as a responsibility of the oil companies. Tullow as one of the oil companies however insists it will not invest in the pipeline, leaving this to Total and CNOOC.

The MOU details that were made public do not indicate whether it is mandatory for the oil companies to invest in the export pipeline.  “It also requires Government to provide support to the oil companies in acquiring approvals for studies and surveys for an export pipeline and to initiate discussions with neighboring countries in relation to cross border frameworks for the pipeline” read the MOU in part.

McDade further said they were disappointed in the pace of events in Uganda. Tullow has been waiting for a production license since it submitted this request – A Field Development Plan – in 2012. Tullow appears more upbeat about its prospects in Kenya, calling the pace “very fast” and that government was “encouraging that pace.”

//Cue in: And again I think…
Cue out: …in 2015 and early 2016//

CNOOC acquired a production license for the Kingfisher Field in Buliisa in 2013, making it the first production license to be issued by Uganda to any oil company. Total applied for a production license in December 2013, and is expecting approval or a response in the next six months. Uganda has reserves of about 3.5billion barrels, with the amount that can be recovered at 1.7 billion barrels. Commercial production is projected to start in 2018, once a refinery and export pipeline are complete.