October 18, 2011 / 6:58 AM / 7 years ago

Uganda to start refining its own oil in 2014: Museveni

KAMPALA (Reuters) - Uganda expects to start refining crude oil from its fields in 2014 and the proceeds will help end the economy’s dependence on donor aid, its president said.

Uganda's President Yoweri Museveni in Tanzania during a meeting of the African Union in a file photo. REUTERS/Antony Njuguna

The east African nation discovered commercial oil deposits in 2006 in the Albertine basin along its border with the Democratic Republic of Congo and reserves of about 2.5 billion barrels have been confirmed.

“The first oil to be refined will be in the year 2014,” President Yoweri Museveni told a ruling party retreat in the eastern town of Jinja, in a speech seen by Reuters late Monday.

Officials had to commission a feasibility study for the refinery to convince firms involved in the sector that the project was viable.

“We should resist ferociously those parasites who want to give away this resource for ‘a morsel’ of food as did Esau in the Bible,” Museveni said.

Firms involved in the nascent oil sector include London-listed Tullow Oil, Heritage Oil, French oil company Total and Chinese oil group CNOOC.

Last week, Uganda’s parliament passed a resolution urging government to withhold consent to Tullow Oil’s proposed partnership with Total and CNOOC.

That deal, in which Tullow is selling stakes in its Ugandan exploration properties to the two companies for $2.9 billion, is expected to unlock a $10 billion investment that will see the country’s oil sector advance into production phase.

The country’s ministry of energy estimates the basin’s crude reserves could climb to 6 billion barrels when fully explored. Only 40 percent of the basin has so far been studied.

In November last year, the ministry said a phased construction of the refinery would begin in 2012, starting with capacity for limited production to satisfy the domestic market whose demand ranges between 20,000-25,000 barrels per day.

The refinery’s capacity is expected to be ramped up gradually thereafter to meet regional and international demand, with output peaking at about 200,000 barrels per day.

When fully developed, the refinery is expected to cost $2 billion.

President Museveni has insisted on developing a domestic refinery and guaranteeing higher earnings to avoid the pitfalls that have bedeviled other sub-Saharan African oil producers.

“Since we discovered the oil and gas, the agents of foreign interests have been running up and down urging us to produce the oil as quickly as possible,” Museveni said.

“We insisted on building a refinery and rejected those who were pressurising us to export crude oil. They claimed that a refinery was not ‘economical’...we rejected this.”

He said a feasibility study by Foster Wheeler had confirmed the viability of a refinery in Uganda.

“This oil will give Uganda financial independence,” he said.

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