China National Offshore Oil Corporation Ltd (CNOOC) has finally closed the long-awaited Final Investment Decision (FID) for the development of Uganda’s oil and gas projects in the Albertine.
Energy and Mineral Development Minister, Ruth Nankabirwa said that the Chinese confirmed that they have authorized an FID in Uganda.
“I was with the chairman of CNOOC yesterday in a meeting, they have delivered a letter in writing, the problem has been sorted out,” said Nankabirwa. “They have signed the agreement which they had just initialed, upon my letter to their chairman. It was a concern of Total; it was a concern of the government but the issue has been sorted out. CNOOC has taken FID.
The decision by the Chinese is to unlock billions of dollars of investment in Uganda’s oil and gas sector.
The FID gives a green light to the proposed construction of a $3.5 billion East African Crude oil pipeline (EACOP) and other infrastructure in the Lake Albert region.
CNOOC operates the Kingfisher Project which expects to produce oil and gas from Lake Albert.
Ali Ssekatawa, the Director of Legal and Corporate Affairs at Petroleum Authority of Uganda -PAU described CNOOC’s decision as a significant milestone for the people of Uganda and China.
“This project has two anchor companies which are taking it forward, one is Totalenergies from France, and the other one is CNOOC from China,” he explained.
“Total in France made its FID early this year when their president came and met our president. CNOOC indicated that they needed approval from the highest bodies in China. Today our minister has confirmed that she received confirmation that they have sanctioned this project” he said.
The sanctioning of the project, according to Ssekatawa, means that they have allowed to the Kingfisher project to go ahead.
With an FID, CNOOC can proceed with drilling to develop Kingfisher’s Mputa, Nzizi and Waraga fields. The Chinese hope to produce about 40,000 Barrels of Oil per day during peak production.
The FID also paves way for the construction of production facilities including the Central Processing Facility, infield, and feeder pipelines.
According to Ssekatawa, CNOOC’s FID is also expected to increase the momentum for the East African Crude Oil pipeline.
There are four shareholders in the EACOP with Totalenergies Ltd as a major shareholder with 62%.
Total energies took an FID in April this year with the signing of several agreements in Uganda and Tanzania.
The other shareholders include the Government of Uganda through Uganda National Oil Company -UNOC with 15%, the government of Tanzania with 15% through TPDC and CNOOC with 8% shareholding.
“From the Ugandan perspective, the project has turned another important corner, if it is a marathon, we have now turned the last corner and we are chasing the last mile because now we can see Tanga in sight,” said Ssekatawa.
Uganda’s crude oil from the Kingfisher and Tilenga Projects will be transported through a 1,443-kilometer 897-mile heated pipeline for export through the port of Tanga in Tanzania.
Efforts by URN to interview CNOOC Uganda’s Vice President, Cui Yujun were futile because he could not be reached on phone.
Yujun has in the past indicated that CNOC will deliver the Kingfisher project at the same time with Totalenergies’ Tilenga project.
Total in April announced a 43-month journey aimed at having the first oil out of the ground by 2025.
Meanwhile, Ruth Nankabirwa says the government is determined to ensure that Parliament considers and passes all the laws needed to steer the oil and gas sector forward.
Among the pending laws are the East African Crude Oil Bill 2021 Bill, the income tax amendment Bill 2021, and amendments to the Public Finance Amendment Bill 2021.
She hopes that the Parliament will have passed the East African Crude Oil Pipeline Bill by end of this month.