Uganda’s Commercial Oil Production Set for Late 2025

Tilenga Oil Project

Summary:

  • The Petroleum Authority of Uganda confirms commercial oil production to begin in late 2025 after years of delays. Investments totaling $7.5 billion have been made, with an additional $15 billion expected over 25 years. Studies on oil sector impact conducted. IMF forecasts positive economic growth for Uganda and Sub-Saharan Africa.

KAMPALA, (Examiner) – The Petroleum Authority of Uganda (PAU) has reiterated that commercial oil production is set to commence in the fourth quarter of 2025, as preparations to tap into the country’s significant oil reserves accelerate. Despite the announcement of oil discovery nearly two decades ago, production timelines have faced setbacks over the years.

Speaking at the recent International Monetary Fund (IMF) sub-Saharan Africa Regional Economic Outlook 2024 presentation in Kampala, Mr. Tom Ayebare Rukundo, PAU’s manager for economic and financial analysis, emphasized the progress being made. He highlighted that the construction of oil pipelines, a crucial aspect of the project, is on track, with a completion timeline aligning with the anticipated start of production.

According to Mr. Rukundo, substantial investments totaling $7.5 billion have been made in Uganda’s oil sector by the end of 2023, with projections of an additional $15 billion investment over the next 25 years. This substantial investment is expected to significantly contribute to government revenue, with an estimated $1.3 billion already generated in tax revenue before the commencement of oil production.

Furthermore, PAU has conducted various studies to understand the impact of the oil sector on other industries, including real estate, tourism, agriculture, and banking. Contracts worth over $1.8 billion have been awarded to Ugandan companies, facilitating economic growth and job creation.

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The IMF’s Regional Economic Outlook for Sub-Saharan Africa highlights a positive trend in economic activity, with growth expected to rise from 3.4 percent in 2023 to 3.8 percent in 2024. Uganda’s economic growth is also on an upward trajectory, returning to pre-pandemic levels, although challenges such as high-interest payments on public debt persist.

Regarding the exchange rate, concerns over the depreciation of the Uganda shilling have been dismissed, with stability noted compared to other regional currencies. Additionally, experts emphasize the importance of shifting labor to more productive activities to drive growth, with services playing a crucial role in structural transformation.

The $10 billion Uganda oil project encompasses various fields and development areas, including the EACOP, Tilenga oil fields operated by TotalEnergies EP, and the Kingfisher development area operated by CNOOC. This ambitious project signifies a significant milestone in Uganda’s journey towards harnessing its oil resources for economic development.

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