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Tullow to sell oil stake to fund refinery in Uganda

Discussion in 'Biashara, Uchumi na Ujasiriamali' started by ByaseL, Sep 15, 2009.

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    ByaseL JF-Expert Member

    Sep 15, 2009
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    By Ibrahim Kasita
    TULLOW Oil is to sell part of its Ugandan assets to finance the oil pipeline project and other infrastructure required in oil production.

    The Irish-owned oil firm confirmed that it would sell part of its stake in Block-2, to finance developments in the Lake Albertine Basin. The firm is the sole owner of Block-2.

    “Uganda’s oil basin development plan is an integrated project that requires building of a refinery that is linked with pipelines to supply local, regional and international markets,” Tim O’Hanlon, the vice-president for African business, said. They are working with the Government to get a partner to join the project, he added.

    The revelation comes at a time when an integrated project team was working on a plan to develop the Lake Albertine Graben Basin.

    It has also been confirmed that the discovered hydro-carbon resources in the region is about two billion barrels of oil.

    These discoveries, it was said, could support production of over 100,000 barrels of oil per day for 20 years and were sufficient to feed a large-scale refinery.

    O’Hanlon explained that a joint venture was crucial because “we are an exploration and production company, but not in the pipeline or refinery business.”

    “Oil distribution and other issues are very vital as finding oil. We need a partner with expertise in this area,” he said.

    “We have received many interested firms, but we are still screening them with the Government to get the right partner.”

    President Yoweri Museveni said he would not allow the firms to refine the crude oil outside the country. He said it must be refined locally to ensure a greater share of the profits remained in the country.

    He also wants to bring an end to the reliance on Kenyan ports for imported fuel. Tullow and Heritage Oil, its partner in adjoining blocks, have found 700 million barrels of oil reserves, but need to construct a pipeline and a refinery.

    O’Hanlon said the contracts oil companies signed with the Government were “the worst” for the contractor. Ugandans should be rest assured that they will benefit from the oil revenue.”

    “How the Government spends the money is not our business. But we shall advocate for policies that ensure money trickles down to the local and host communities.” The oil firms have injected over $509m in investments and it is expected that by the end of this year the figure would rise to $900m.

    “Uganda has already gained because we have so far invested half a billion dollars in the project.” “Because of the good policies and regulations that Uganda has, we shall continue to invest huge amounts of money in the oil sector.”