A group which includes General Electric has been picked by the Ugandan government to construct and operate a refinery which will process crude oil from fields whose development is being done by Tullow Oil, Total and China’s CNOOC. The facility is expected to refine 60,000 barrels per day.
Uganda’s Ministry of Energy said in a statement that the consortium was selected after a review was conducted on over 40 firms. The Albertine Graben Refinery Consortium consists of Italy’s Saipem SpA, Intracontinent Asset Holdings and Yaatra Ventures LLC.
$4 billion refinery
Since negotiations between Uganda and groups that were led by SK Engineering & Construction from South Korea and RT Global Resources from Russia collapsed, the East African country has been looking for another developer for the refinery that is estimated will cost $4 billion to put up.
In the recent past General Electric has risen in stature after it teamed up with another industry stalwart, Baker Hughes. The Milan, Italy-based Saipem has experience running for over five decades. According to Wood Mackenzie’s oil markets, chemicals and refining vice president, Alan Gelder, the companies that have been chosen means that there is a very chance that the project won’t be delivered since they have all demonstrated competency and wide and long-running experience.
According to Uganda’s Ministry of Energy, a project framework deal is likely to be concluded with the developers in the course of the next few months.
“The consortium has proposed to government a financing approach and a path to establish, develop and operate a commercially viable refinery company with a strategic benefit to the country and the region,” read a statement from Uganda’s Ministry of Energy.
According to Gelder estimating the project’s cost will, however, be hard since the East African country lacks the infrastructure required to ferry equipment inland as it is landlocked.
The oil refinery which will be located in Hoima District, is expected to lead to the growth and development of the petrochemical sector as well as other related sectors in Uganda. Initially the refining capacity of the facility will be 30,000 barrels per day before it is gradually increased. Supplies for the facility will be derived from fields which are estimated to hold approximately 6.5 billion barrels.
The share of the refinery that the consortium will own has not been disclosed though the Ugandan government had reserved 40% for itself, a portion of which it could dispose of to neighboring countries.