OilNews Africa report to enable Uganda’s SMEs tap upstream sector development projects

Leading content generation and upstream oil and gas activity analysis firm OilNews Africa has provided the first free industry outlook for the upcoming Uganda upstream sector development phase being led by TotalEnergies and CNOOC.

Uganda has made its early steps towards the development phase with the engineering, procurement, construction and commissioning (EPCC) services contract for the Tilenga Project awarded to a consortium of a subsidiary of McDermott International, and Sinopec International. The Tilenga project includes six oil fields and will feature 426 oil wells at full production is located in the Lake Albert Basin, Republic of Uganda and is the centrepiece of oil projects projected to bring investments of over $15 billion to Uganda and Tanzania.  It will consist of 31 well pads connected to a central processing facility (CPF) via buried flowlines.

The report titled “Uganda Tilenga Project Development Stage & East Africa Crude Oil Pipeline (EACOP) Outlook 2021 – 2025” looks into the various aspects of the development phase project scope starting with the development of the nine oilfields and the supporting facilities such as camps.  The report looks into initial project schedule and phases with first dives into the expected contracts into the first six months and overall project schedule thereafter.

Later, the report addresses the preliminary well pad schedule for the three rigs as well as services and goods to be provided by Ugandan companies. This is particularly important as the government pushes for local content in the project and the license holders promise to involve local enterprises as a way to acquire a social operating license.

The report also unbundles other support infrastructure projects including the Kabaale industrial park, the refinery and the East African Crude Oil pipeline (EACOP). Under the EACOP construction phase, the report looks at the route, design and planned facilities while it considers the cost-benefit ratio of the refinery. Lastly, the report highlights the technical attributes of the EACOP and Tilenga feeder along with the five spreads before concluding in the pipeline characteristics.

According to the Working Policy Framework Towards MSME Development in Oil & Gas Counties developed by the Kenya National Chambers of Commerce and Industry (KNCCI) access to information has been found to be among the five biggest challenges affecting local investors in East Africa wishing to participate in the nascent oil and gas sector. Other challenges included lack of finance, legal and regulatory environment, access to finance, capacity building and supporting infrastructure.

Lead researcher OilNews Africa Mwambia Mbote said: “We have since inception envisioned a platform that would open up the oil and gas sector and level the field for local players who see great potential in this area but lack the knowhow on ways to engage. This outlook allows local businesses in Uganda to be part of this multi-billion dollar development phase at all levels including in various segments that have been ring-fenced for local companies. We do believe that local companies can be involved through all levels (technical, skilled and unskilled) through mutually beneficial joint ventures with international companies.”

It is estimated that Uganda’s SMEs could earn up to $1.5 billion from contracts associated with the development phase in the Kingfisher and Tilenga oil projects as well as the EACOP and Kabaale Petrochemical city estimated to cost over $15 billion. This follows the country’s local content laws which require that not less than 10% of the total contract is reserved for National Content and in cases, two bids are very close, by 5%, the winning bid is reserved for that with the highest score on Local Content.

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