The delay by international Oil Companies to make a final Investment Decision (FID) has thwarted government's ambitions for first oil by 2020.
Energy and Mineral Development Minister, Irene Muloni admits it may not be possible for to have oil out of the ground by end of 2020. She says her ministry has provisionally shifted the production timelines to 2021 depending on when the international Oil companies take a decision on whether they will invest in the production of oi in the Albertine Graben.
Muloni was one of the speakers at the just concluded the Africa Oil Week conference in Cape Town South Africa. She told the conference that the new 2021 timeline is line with industry targets.
The Joint Venture Partners (CNOOC, Total and Tullow) were expected to make a final Investment Decision for the integrated Lake Albert project by end of this year. But sources in the Industry indicate that the decision is unlikely to be reached with I the remaining one month.
The Lake Albert Development Project expected to produce around 230,000 bopd when it reaches plateau.
The government approved Development Plans for the project in August 2016 to develop the first 1.2 billion barrels of oil.
The Companies also conducted front-end engineering (FEED) designs and submitted them to government. Muloni confirmed that the government received the FEED design reports.
She said the government is still going through the processes of approval of the designs.
A source at the Ministry of Energy speaking on condition of anonymity told URN the Joint Venture Partners are still involved in evaluations to determine the viability of the projects before they can source $3-4 billion dollars for the refiner and another $3'5 billion for the 1,445 kilometer pipeline to the Port of Tanga.
Meanwhile URN learnt that there has been prolonged negotiations between Uganda and Tanzania over the Host Government Agreement for the East African Crude Oi Pipeline as per the Inter-Governmental Agreement between Uganda and Tanzania.
Negotiation of the Host Government Agreement (HGA) which shall be the framework for the implementation of the EACOP Project commenced in August 2017 but has been dragging on.
Some analysts say the delay to start oil development work has allowed time for an extensive exploration and appraisal programme in the Lake Albert area. But there is concern that the shifting of timeline to actual production is negatively affecting some of the industry players.
A delegation of EU diplomats this week visited some of the oil projects like the development of Airport in Kabale Hoima among others. While donor said they were satisfied with developments, they equally expressed concern about the delay.
Belgian Ambassador to Uganda, Hugo Verbist said infrastructure works around oil have been part of the government's priorities. But he says oil should now be produced so that the social, agriculture and other sectors can benefit.
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Verbist said there are companies that established in Uganda alongside the oi value chain but their activities are almost on standstill because oil production has delayed.
Stephanie Rivoal, the Ambassador of France in Uganda perhaps put it more vividly as to why oil production should not be faced with further delays.
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The French Government has been behind Total E&P which is one of the Joint Venture partners CNOOC and Tullow.