Uganda to develop oil refinery in Hoima district

HoimaUganda has selected a consortium including General Electric (GE) and Italian Saipem to build and operate a 60,000 bpd oil refinery plant in Hoima district in the western part of the country

In a statement to the Bloomberg, the Ministry of Energy in Uganda said that the proposed refinery will process crude from fields that are being developed by France’s Total SA, China’s Cnooc and the UK’s Tullow Oil Plc.

After the country’s initial negotiation with Russian RT Global Resources and South Korean SK Engineering & Construction fell through for developing the US$4bn project, Uganda initiated the selection process. According to the source, the Albertine Graben Refinery Consortium competed with 40 other companies to be selected by Uganda government. The consortium also includes Yaatra Ventures LLC and Intracontinent Asset Holdings Ltd.

With GE recently acquiring Baker Hughes and Saipem’s extensive experience in the field for more than 50 years, the project is expected to face low priority risk for its completion, said the industry experts.

Alan Gelder, vice-president of refining, chemicals and oil markets at consultants Wood Mackenzie, said to the source, “The risk to the project getting delivered is smaller because those companies are both very good at what they do.”

“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,” said the ministry.

The Uganda government hopes to conclude an agreement for the project framework in next two months.

According to the source, the oil refinery plant in Hoima will initially process 30,000 bpd of oil. After completely starting in 2020, the plant will be supplied with around 6.5bn barrels of resources from fields developed by Total, Tullow and Cnooc.

Apart from the oil refinery in Hoima, Uganda is also under process in building a refined-product pipeline to Kampala and a crude-export pipeline through neighboring Tanzania.

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