CNOOC Secures Approval for LPG Facility at Kingfisher

Summary:

• China National Offshore Oil Corporation (CNOOC) has received cabinet approval to construct an LPG facility in Uganda’s Kingfisher area, aiming to mitigate gas flaring risks, while also planning a 39.1MW gas-to-power project, with concerns raised about potential gas flaring if necessary infrastructure is not established by the government.

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The Cabinet has granted approval to China National Offshore Oil Corporation (CNOOC) Uganda Limited to proceed with the construction of a Liquefied Petroleum Gas (LPG) facility in the Kingfisher development area. The announcement was made by Godfrey Kabbyanga, the state minister in charge of national guidance, during a cabinet briefing at the Uganda Media Centre in Kampala.

This approval signifies a significant achievement for CNOOC, which has already initiated oil drilling activities and mobilized equipment at its Kingfisher Oil field in Kyangwali Sub-County, Kikuube District, situated in mid-western Uganda.

In the previous year, CNOOC Uganda Ltd submitted an application to the government for a license to produce and distribute Liquefied Petroleum Gas and electricity generated from the gas resources located at its Kingfisher oil field.

Uganda, committed to avoiding gas flaring in its oil production efforts in the Albertine region, faces international pressure to reconsider oil and gas projects. Nonetheless, experts note that some of these nations continue to engage in gas-flaring practices.

Commissioner Midstream (DOP) at the Ministry of Energy and Mineral Development, Eng Geoffrey Ogwang, emphasizes the timely nature of the approval for the LPG facility’s construction, aiming for completion before the anticipated first oil drop in 2025. The goal is to have the facility operational when oil extraction begins, thereby reducing the risk of gas flaring.

Ogwang highlights the establishment of the LPG facility as a significant advancement for Uganda in promoting clean energy initiatives. He underscores the dual benefits, emphasizing that the produced LPG not only satisfies energy demands but also contributes to environmental sustainability.

In addition to LPG, the leading Chinese oil giant in Uganda’s energy sector, with a one-third stake in Exploration Areas and Kingfisher, intends to generate electricity from the gas resources. In 2022, the company submitted a license application to the Electricity Regulatory Authority (ERA) for a 39.1MW gas-to-power project at the Kingfisher oil field.

The gas-to-power project is crucial for meeting the oil production target at Kingfisher, as outlined in the non-technical summary and environmental and social impact assessment report. The report reveals plans to produce 40,000 barrels per day, utilizing 9.1 MM standard cubic feet of gas for electricity generation and LPG production for local market sales.

The report also outlines the generation of electricity at the Central Processing Facility, with excess electricity sold to the government through the national grid connection. However, after the initial 10-11 years, gas volumes are expected to decrease, necessitating the import of power from the national grid through power lines. The responsibility for establishing and constructing this power line infrastructure lies with the government, and failure to do so before oil production commencement could lead to potential gas flaring. According to the Global Gas Flaring Reduction Partnership (GGFR), gas flaring is considered a wasteful practice that squanders a valuable energy source, which could otherwise contribute to economic development, enhance energy security, and serve as an environmentally friendly alternative to more harmful energy sources.