Ugandan companies receive Shs900b oil deals

Cnooc Uganda Ltd, the operator of the Kingfisher oil field whose early drilling works were flagged off yesterday, will invest approximately $580m (Shs2.1 trillion) this year and next year in the quest to fast-track oil production to start in the last quarter of 2025.

The cost of developing the oil field, which will pump Uganda’s first crude oil, is estimated at $2b (Shs7.3 trillion) as per the Petroleum Authority of Uganda (PAU) that among others, reviews and approves oil companies’ work plans and budgets.
The frenzied investments kicked in last year, with Cnooc sinking $346m (Shs1.2 trillion) into the same project after the government and the oil companies—French TotalEnergies EP and Cnooc—announced investment of $10 billion (Shs36.5 trillion) to bring Uganda within touching distance of starting commercial oil production in 2025.

Once commercial oil production starts, Cnooc will spend another $1.5 billion (Shs5.5 trillion) over a 20-year period for maintenance of the project. The significant amount of money, however, still goes back to foreign Engineering, Procurement and Construction (EPC) firms employed on projects alongside local ones.
In the grand scheme of things, this year—much like its predecessor—kicked off on a high note yesterday with the launching of early oil drilling works of the first oil well at the Kingfisher oil field. The oil field is located 2km off the shores of Lake Albert in Kikuube District.

The key milestone yesterday came almost a year after the oil companies and their local partners—Uganda National Oil Company (Unoc), and Tanzania Petroleum Development Corporation (TPDC)—closed the long-awaited Final Investment Decision (FID). This paved the way for the awarding of some 92 tenders totalling $1 billion (Shs3.6 trillion) for provision of goods and services on the Kingfisher project alone.

Of the $1 billion, according to PAU, contracts worth $270 million (Shs986 billion) were awarded to Ugandan companies mainly in areas of civil works, hospitality management, transportation and ICT.

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