MEMBER ENGAGEMENT ON THE INVESTMENT OPPORTUNITIES WITHIN THE OIL AND GAS VIRTUAL MEETING HELD ON 10TH FEBRUARY 2021
On 10th February 2021, a virtual meeting was held with members to share information on potential investment opportunities available in the oil & gas sector.
There were Sixty-Seven (67) participants from both the PSFU membership database and representatives from the Ministry of Local Government, Ministry of Trade, Industry and Commerce, Ministry of Gender, Labour and Social Development, Ministry of Tourism, Wildlife and Antiquities, Ministry of ICT and Sciences etc.
Presentations from Uganda Chamber of Mines and Petroleum (UCMP) and Petroleum Authority of Uganda (PAU) were made mainly highlighting the oil geographical coverage of oil minerals in Uganda, Foreign Direct Investment to date, commercial plans available, field developments, key drivers of investment and available investment opportunities for most of the economic sectors of Uganda.
Uganda Chamber of Mines and Petroleum (UCMP) and Petroleum Authority of Uganda (PAU) presentation.
- Geographical coverage
Albertine Graben is the principal prospective areas for petroleum exploration with 21 oil and gas discoveries, 14 fields under development, 6.5 billion barrels of oil equivalent in place, 1.4 billion barrels recoverable, gas (non-associated) initially in place (GIIP) stands at 500 BCF, 40% of Albertine Graben has been explored; less than 15% is licensed. Other sedimentary basins in the country are under investigation; example Moroto-Kadam Basin
- Foreign Direct Investment to date
Investment in exploration and appraisal operations was over US$3.5 billion by the end of 2018, US$ 15 to 20 billion expected to be invested in the next 3 – 4 years. Massive opportunities for: Primary investors, e.g. exploration companies, Secondary investors, e.g. service companies (contractors), Tertiary investors, e.g. subcontractors.
- Commercial plans
Road to first oil –us $ 20 billion investments i.e. medium term include, upstream (pipelines, Central processing facility, base camps etc., Uganda refinery project of 60,000 bpd, east Africa crude oil pipeline of 190,000 bpd, support infrastructure i.e. airport, industrial parks, roads. Long term include development of petrochemical and energy based industry.
- Field development to 1st
450 wells planned to be drilled in the next 3-5 years, refinery development, pipeline development, support infrastructure i.e. Kabaale industrial park, road construction etc.
- Key drivers for investment highlighted included the following;
- Entering a Construction Phase for the next 3 to 5 years
- 11,000 to 15,000 in camps being fed everyday
- Over 100,000 people in the graben doing activities involved in oil and gas
- Over 1m people moving within the Albertine Graben during the construction phase of the oil and gas projects.
- Post Construction (25-year investment)
- New exploration projects 2018-2024 • Necessary infrastructure in place like airport, Roads, Power
- Infrastructure being put in place like the airport
- Road network is being improved, approximately 700kms of tarmac road
- Infrastructure being put in place will boost urbanization and therefore ensure investment in Agriculture is feasible.
- Key areas for consideration include the 10 districts in Uganda traversed by the EACOP • Other key areas include Hoima, Biiso, Butiaba, Kabwoya, Buliisa, Masindi.
Available opportunities in Engineering Procurement and Construction (EPC) phase to 1st oil were highlighted as indicated in the table below;
|
No |
Sector |
Opportunities |
|
1. |
Engineering |
• Civil Engineering and Design Services • Mechanical Engineering Services • Specialized Engineering Services • Drilling Equipment & Supplies • Manufacturing & Supplies (steel, pipes, metal basic structures) • Management & Technical maintenance Services (Engineering, plant, Surveys • Equipment maintenance: Generators, Pumps, etc. • Electrical Equipment (installation, repair & Maintenance) • Capital Equipment: industry Heavy Machinery • IT/Communication Services • Computer maintenance & System services |
|
2. |
Construction |
• Construction Services (Building, earthworks, civil works, tunneling, piles, caissons etc.) • Construction Materials: Steel, basic structures • Construction Materials: Raw Materials (Cement, Gravel, Sand, etc.) • Demolition and site preparation • Building & facilities maintenance • General &Site Support Services (Catering, hospitality, maintenance, laundry, cleaning, waste Management; etc.) • Consumables for Site Support (food, water, office supplies, stationery, etc.) • Personnel Services: Vocational, induction, Training & Health, Safety & Environment • Manpower/recruitment services Consumables: Uniforms, Personal Safety Equipment |
|
3. |
Logistics |
• Supply Chain Management Services • Freight forwarding, • Customs, • Warehousing, • Transport of goods • Lifting Services • Vehicle Fleet Management • People Transportation, • Logistics in-country (Car, truck rentals and other vehicles) • Accommodation for Expatriates • Evacuation Services • In-country flight Services |
|
4. |
Agriculture |
· Commercial agriculture · Agriculture machinery · Cold chain including storage and transportation · Food processing |
|
5. |
Housing |
· Provision of low middle and high end housing · Construction/ provision of office space · Construction/ provision of warehousing facilities |
|
6. |
Civil works |
Supply of; · Earth moving and lifting equipment · Mechanical equipment · Electrical equipment · Firefighting equipment/ material · Piping equipment · ICT equipment |
|
7. |
Health |
· Medical emergency response · Provision of in site clinics · Personnel medical insurance · Occupational health services · Medical supplies and logistics · Medical infrastructure services · Consultancy services for the development of health management systems, policies and procedures • Health Risk Assessments, gap analysis and planning of medical services • Medical Emergency Response Planning and management • Provision of onsite clinics, medical staff, equipment and supplies and road ambulances • Topside Support service- 24/7 medical support (on call) • Medical Assistance and Medical Evacuations |
|
8. |
Other services |
• Energy: Fuel, Electricity, Generators • Environmental services • Financial & Risk Services: Banks, Insurance • Hazardous Waste Management • Health Services • Legal Services • Security Services • Consumables: Lubricants/Chemicals • Consumables, replacement Parts • Maintenance & Repairs • Site improvement Services (Gardening, landscaping, pest-control) • Goods: (wholesale Distribution/manufacture e.g. foodstuffs, stationery, drinking water, etc. |
Services that have been ring-fenced for Ugandans under the legislation which presents a great opportunity for the local investors in the tertiary category include the following;
1.Transportation. 2. Security. 3. Foods and Beverages. 4. Hotel accommodation and Catering. 5. Human Resource Management. 6. Office supplies. 7. Fuel supply. 8. Land surveying. 9. Clearing and forwarding. 10. Crane hire. 11. Locally available construction materials. 12. Civil works. 13. Supply of locally available drilling and production materials. 14. Environment studies and impact assessment. 15. Communications and information technology services. 16. Waste management, where possible.
Standards presentation by Uganda National Bureau of Standards (UNBS)
The standards presentation included the importance of standards, current stock of standards with the thematic areas plus certification as detailed below;
- Introduction depending on the importance
Safeguard consumers and users of your products and services, provide a strong basis for regulation, helping save time and reduce barriers to trade, help businesses of any size and sector reduce costs, increase productivity and access new markets, build customer confidence that your products are safe, reliable and compatible, reduce costs across all aspects of the business and Product competitiveness.
- Current stock of standards
The Uganda Standards for Oil and Gas are 442 clustered in thematic areas i.e. UNBS/PAU jointly have further mapped other standards for supply of goods and services covering: tourism, catering, logistics, camping, pesticide control, waste management, construction and induced services, transport, land surveying, food and beverages, Hotel and accommodation, suppliers of construction materials, skilling and local content deficiencies or gaps as well as Quality, Health, Safety, Security & Environment. The table below shows the thematic areas and number of standards.
|
No |
Thematic areas |
# of (No of standards) |
|
i. |
Petroleum and petrochemical products |
193 |
|
ii. |
Drilling, development and production equipment and materials |
74
|
|
iii. |
Petroleum management and occupational health and safety |
(52)
|
|
iv. |
Petroleum Distribution |
65 |
|
v. |
Petroleum transportation and refining |
58 |
- Certification
The type and definition of the needed certification that meets specific requirements were discussed as below;
- System Certification: system that meets requirements of relevant standard and meets customer requirements.
- Product certification: Assurance that the production process in place meets safety and quality requirements. e.g. mineral water, cement, textiles, food materials, safety ware.
- Process certification: ensures safety of operations and safe and quality product – e.g. HACCP/GHP/GMP. It supports local product and export competitiveness.
4.0 Business reactions
Through a discussion on what is required, who and how members can benefit from the presented investment opportunities within the sector, the following highlights the reactions to the presentations done by UCMP, PAU and UNBS.
- Members were informed that government re-fenced the legal element in the Local content i.e. good terms are provided for local suppliers.
- Clarity on the definition of the what a regulated or registered Ugandan company is i.e. “Ugandan company” for purposes of section 125 of the Act and these Regulations means a company incorporated under the Companies Act, 2012 and which—
- (a) provides value addition to Uganda;
- (b) uses available local raw materials;
- (c) employs at least 70% Ugandans; and
- (d) is approved by the Authority under regulation 9(4). Thus a company to be considered as a Ugandan Company, has to be Incorporated in Uganda as per Companies Act 2012.
- Members were informed that a company can be incorporated outside Uganda BUT registers here in Uganda either as a branch or a subsidiary.
- Final Investment Decision will be finalized by end of this quarter i.e. commitment is needed to prepare the private sector.
- Need to know the levels of financial institutions involvement in the preparation of the investment opportunities.
- Need to share registration Information i.e. how members can register on the national suppliers’ database.
- Need to carryout capacity building in terms of training i.e. time, volumes and standards to enable the business community to benefit from the opportunities.
- Utilization and access of public land within the Albertine region through Public Private Partnerships.
- Involvement of the local government to disseminate information.
- Need to involvement of youths in the investment opportunities preparation process considering that the youth are innovation.
- Guide on ways of negotiating the pricing of the goods/services i.e. fish supply.
- Opportunities under the sector should be safeguard from politics.
- How local businesses can observe environmental and social safeguard.
- Need to upscale the level of sensitization of the citizenry on the subject to enhance their capabilities to tap into the available opportunities.
- Clarification whether the local businesses supplying goods and services can be provided with a common pool to crowd fund for social investment activities for communities in the oil and gas affected region.
Responses /recommendations
- Though Final Investment Decision commitment from investors ends in the next month, members need to understand how to prepare for the opportunities
- PAU and PSFU to work together to disseminate registration of members to the National Suppliers’ Database.
- Camp managers to handle the price of the supplies and quality of products through competitive bidding.
- Cost recovery mechanism is that companies are given leeway to procure after approval of documents by PAU.
- Local content fund to be considered in the local content bill.
- Recommended that Uganda Development Bank to be part of the financing exercise.
More reading: https://www.monitor.co.ug/uganda/news/national/total-eacop-oil-deal-in-high-gear-after-call-for-bids-3304704
