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Uganda Sees $70 Million Initial Spending on Oil Storage

Uganda Sees $70 Million Spending on Initial Oil-Storage Facility

(Bloomberg) -- Uganda, which plans to produce and refine its own oil, said it will require as much as $70 million to construct a storage facility for refined products on the outskirts of the capital, Kampala.

The East African country will initially build storage with capacity for 60,000 cubic meters that it may upgrade to 138,000 cubic meters if there’s demand, Josephine Wapakabulo, chief executive officer of the Kampala-based Uganda National Oil Co., said Thursday in an emailed response to questions.

Uganda, which targets starting oil production from its western Lake Albert region in 2020, will seek a joint-venture partner for the project and will invite bids before the end of the year, she said. It already has storage for 30,000 million liters in the eastern town of Jinja.

The country signed in April a project framework agreement with the Albertine Graben Refinery Consortium, which includes a unit of General Electric Co., to develop a 60,000 barrels-per-day refinery. The facility in the oil-rich Hoima region will initially operate at half capacity before being upgraded.

The Ugandan government will have a 40 percent stake in the refinery. Of that shareholding, some percentage may be offered to neighboring Kenya and Tanzania, which “previously expressed interest,” she said. The government has in the past said the two were keen to take up 2.5 percent and 8 percent stakes respectively.

France’s Total SA, China’s Cnooc Ltd. and London-based Tullow Oil Plc are jointly developing Uganda’s 6.5 billion barrels of discovered oil resource, of which as much as 1.7 billion barrels are recoverable.

Uganda will also export its crude through a 1,445-kilometer (898-mile) pipeline worth $3 billion to a Tanzanian port. The host agreements with the three companies could be signed within three months, Robert Kasande, the permanent secretary in Uganda’s Energy Ministry, said by phone.

To contact the reporters on this story: David Herbling in Nairobi at dherbling@bloomberg.net;Fred Ojambo in Kampala at fojambo@bloomberg.net

To contact the editors responsible for this story: Paul Richardson at pmrichardson@bloomberg.net, Helen Nyambura, Michael Gunn

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