OVERVIEW OF THE OIL AND GAS SECTOR IN UGANDA

Transcription

1 MINISTRY OF ENERGY AND MINERAL DEVELOPMENT OVERVIEW OF THE OIL AND GAS SECTOR IN UGANDA Honey Malinga Commissioner, PEDPD DIRECTORATE OF PETROLEUM A Presentation to THE VISITING DELEGATION FROM AFRICA HOUSE 22 nd May, 2017 SHERATON HOTEL, KAMPALA 1

2 PRESENTATION OUTLINE Introduction Policy, Legal and Institutional Framework Status of Upstream Petroleum Activities Status of Midstream Petroleum Activities Investment Opportunities Conclusion.

3 Objective To Give an update on: i. The Legal, Regulatory and Institutional Framework of the Oil and Gas sub-sector; ii. The Current Licensing regimes; and, iii. Status of the required Infrastructure and planned ones.

4 INTRODUCTION 4

5 INTRODUCTION KEY FACTS AND FIGURES Location: On the Equator, Bordering Kenya, South Sudan, DRC, Rwanda & Tanzania. Area: 242,000 km 2 GDP (2015): US$27.0 Billion. Population (2015): million. GDP Per Capita (2014): US$ GDP Growth Rate (2015): 5.0%. Government: Republic and Constitutional Democracy with regular elections. The land linked position, gives the country a strategic advantage to be a regional hub for trade and investment. 5

6 6 INTRODUCTION(2) The Petroleum Value Chain Exploration, Development, Production and Decommissioning Transportation, Refining and Gas Processing Distribution, Sales and Marketing Upstream Midstream Downstream

7 INTRODUCTION(3) The Albertine Graben The Graben forms the northern most part of the Western arm of the East African Rift System Runs along Uganda s western border with DRC Lake Albert Eastern Arm 500 km long, averaging 45 km wide and 23,000 sq km in Uganda. Lake Tanganyika 7 About 1300 km from the coast Lake Malawi

8 INTRODUCTION(4) MALI!.!.!.!.!.!.!.!.!.!.!. IV. COAST ALGERIA NIGERIA LIBYA!.!. ANGOLA NAMIBIA!.!.!.!. D.R.C SUDAN!. ZAMBIA SOUTH AFRICA ETHIOPIA!.!.!.!. MADAGASCAR Sedimentary Basins of Uganda SUDAN 1. The Albertine Graben 2. Hoima Basin DRC Kadam--Moroto Basin 3. Lake Kyoga Basin Hoima Basin Lake Kyoga UGANDA 4. Lake Wamala Basin L. Wamala Basin KENYA 5. Kadam-Moroto Basin Lake Edward Lake Victoria 6. Lake Victoria Basin 8 RWANDA TANZANIA The Albertine Graben is the most prospective. 8

9 INTRODUCTION(5) History of Sector : Preliminary Exploration : Stagnation to Date: Consistent And Modern Efforts. Licensees changed from small to independents and Majors which is generally the trend in the industry. Documented in The Story of Petroleum Exploration in Uganda, : A Matter of Faith 9

10 POLICY, LEGAL, REGULATORY AND INSTITUTIONAL FRAMEWORK 10

11 POLICY, LEGAL, REGULATORY AND INSTITUTIONAL FRAMEWORK Petroleum Resource Management are divided into three major components EXTRACTION OPTIMISATION VALUE MAXIMISATION REVENUE MANAGEMENT Exploration Development Field development Production Tail-end Abandonment Sales Refining Transportation Industrialisation Power generation Infrastructure Devt. Development Fund Sustainable Devt. Enhance competence Income stabilisation Future generations 11 11

12 POLICY, LEGAL, REGULATORY AND INSTITUTIONAL FRAMEWORK(2) The Constitution of the Republic of Uganda, Article 244 of the Constitution, the petroleum (oil and gas) resources is vested in the Government on behalf of the Republic of Uganda. The Energy Policy for Uganda 2002 The Goal: To meet the energy needs of Uganda s population for social and economic development in an environmentally sustainable manner The mandate of the Ministry of Energy and Mineral Development (MEMD) is "To Establish, promote the Development, Strategically Manage and Safeguard the Rational and Sustainable Exploitation and Utilization of Energy, Petroleum and Mineral Resources for Social and Economic Development 12

13 POLICY, LEGAL, REGULATORY AND INSTITUTIONAL FRAMEWORK(3) Policy and Legal Framework POLICY LAWS REGULATIONS and STANDARDS AGREEMENTS POLICY The National Oil and Gas Policy (2008) LAWS The Petroleum (Exploration, Development and Production) Act, 2013 Petroleum (Refining, Conversion, Transmission and Midstream Storage) Act, 2013 Petroleum Supply Act, 2003 Public Finance Management Act 2015 that handles petroleum revenue management REGULATIONS The Petroleum (EDP) Regulations 2016 The Petroleum (EDP)(Health, Safety & Environment)Rg ns 2016 The Petroleum (EDP) (National Content) Regulations 2016 The Petroleum (EDP) (Metering) Regulations 2016 The Petroleum (RCTMS) Regulations The Petroleum (RCTMS) (National Content) Regulations, 2016 The Petroleum (RCTMS)(Health, Safety & Environment) R ns, 2016 The Petroleum Supply (General) Regulations 2009 Petroleum (Marking and quality control) regulations, 2009 AGREEMENTS Model Production Sharing Agreement and Joint Operation Agreement

14 14 POLICY, LEGAL, REGULATORY AND INSTITUTIONAL FRAMEWORK(4) INSTITUTIONAL FRAMEWORK The Resource Management - Ministry of Energy and Mineral Development - Directorate of Petroleum; Environment MWE, NEMA, UWA, DWRM, NFA, MLHUD, MAAIF; Revenue MFPED, URA, BOU, OAG; Government Ministries, Agencies and Departments recognised in the NOGP (MoJCA, MoGLSD, UIA etc) District Local Governments. Other Stakeholders; Oil Industry, Development Partners, Civil Society, Media, Academia etc. 14

15 POLICY, LEGAL, REGULATORY AND INSTITUTIONAL FRAMEWORK(5) 15

16 POLICY, LEGAL, REGULATORY AND INSTITUTIONAL FRAMEWORK(6) Institutional framework MINISTRY OF ENERGY (DIRECTORATE OF PETROLEUM) Policy and Licensing MINISTRY OF ENERGY AND MINERAL DEVELOPMENT (DoP) Policy, Licensing, Regulation, Commercial NATIONAL OIL COMPANY Commercial and Business interest PETROLEUM AUTHORITY Monitoring and Regulation

17 STATUS OF PETROLEUM EXPLORATION, DEVELOPMENT AND PRODUCTION 17

18 Number of Wells STATUS OF UPSTREAM ACTIVITIES Exploration and Appraisal Drilling DRILLING SUCCESS TREND IN THE ALBERTINE GRABEN 12% Discovery st Commercial Discovery 88% Success Failure YEAR Dry hole Drilling trend in the Albertine Graben (Source : PEDPD) 121 exploration and appraisal wells drilled in the Albertine Graben to date 39 exploration wells and 82 appraisal wells 106 wells encountered hydrocarbons 21 oil and gas discoveries made and drilling success rate of over 88% 36 wells have been flow tested Crude blend between API with very low sulphur of 0.16wt/%. Paraffinic and waxy

19 RESOURCES (MMBBL) Cummulative number of wells STATUS OF UPSTREAM ACTIVITIES(2) Resources and Reserves CRUDE OIL 8, Billion Barrels of Stock Tank Oil Initially In Place (STOIIP) 1.4 Billion barrels of recoverable reserves 7,000 6,000 5,000 4, ,000 NATURAL GAS 2, BCF of non-associated Gas Initially In Place (GIIP) 173 BCF of associated gas 1, Cumm expl wells Cumm appraisal wells Mid STOIIP Recoverable Mid 20 0 Statistical increase in Uganda s resources (Source: PEDPD) 19

20 STATUS OF UPSTREAM ACTIVITIES(3) Investments in the Sector Investment by industry was just over US$ 3 billion by the end of st Commercial Discovery Sharp increase in investment after first commercial discovery. IOC s spend on contracts with local service providers growing, 23% in 2011 to 42% in 2014 and 36% in Expected to increase significantly ($15 to $20 billion) during field development and production including development of a refinery and attendant pipelines.

21 STATUS OF UPSTREAM ACTIVITIES(4) Licenses and Acreage Total E&P Uganda B.V 3 Production Licenses issued for 4 fields. 3 PL applications under review. Tullow Uganda Operations Pty Limited 5 PLs issued for 9 fields. CNOOC Uganda Limited The Operator for the Kingfisher Field Development Area. Exploration Licensing PSA negotiations ongoing for the Ngassa and Kanywataba areas in the First Licensing round

22 STATUS OF UPSTREAM ACTIVITIES(5) Field Development Buliisa/Nwoya Fields Production plateau of ~190k bopd ~ 395 wells on 36 well pads Buliisa Kabaale Feeder pipeline: 102 km, 22 Diameter. FEED ongoing 22 Kingfisher and Kaiso Fields Production plateau of ~40k bopd ~ 40 wells on 4 well pads Kingfisher-Kabaale Feeder pipeline: 47km, 12.5 FEED ongoing

23 STATUS OF UPSTREAM ACTIVITIES(6) Exploration Licensing Blocks 1 st Open Licensing Round announced for six blocks in February Qualification of Applicants 16 out of 19 applicants that were issued with RfQs were pre-qualified. Bidding 7 out of 16 potential applicants submitted proposals. Negotiation of three PSAs currently ongoing and expected to conclude Q

24 STATUS OF PETROLEUM REFINING, PROCESSING, CONVERSION AND BULK TRANSPORTATION 24

25 STATUS OF UPSTREAM ACTIVITIES Commercialization of Discoveries 1. CRUDE TO POWER 2. CRUDE OIL REFINERY 3. CRUDE EXPORT PIPELINE Use of crude oil and gas f o r p o w e r g e n e r a t i o n Phased development of a 60,000 barrels of oil per day refinery Export of crude oil by pipeline or any other means 25 25

26 STATUS OF MIDSTREAM ACTIVITIES(2) 26 Refinery Development No refining capacity in Eastern Africa; Economically feasible project; Opportunity to support industrialization; Acquisition of 29km2 of land for the refinery and associated petrochemical industries; 98% PAPs compensated; Resettlement houses 80% completed Negotiations with RT-Global were terminated in June 2016 and since then Government commenced another identification process; Due Diligence have been undertaken on two potential lead investors; Uganda Refining Holding Company incorporated under the UNOC; Refinery Distribution in Africa (Source: CITAC)

27 STATUS OF MIDSTREAM ACTIVITIES(3) East Africa Crude Oil Pipeline (EACOP) Project Hoima(Uganda) to Tanga Port (Tanzania) 1445km long, 24-inch diameter Project partners; GoU, GoT, Upstream licensees Uganda Project Devt Committee in place FEED Study launched in Jan 2017 Target FID; End CAPEX Estimate: USD3.55bn/ OPEX Estimate: USD91m/y Geotechnical and geophysical surveys are ongoing

28 STATUS OF MIDSTREAM ACTIVITIES(4) 28 Support Infrastructure Master Plan for the Industrial Park is being developed by SMEC International (Australia) to be concluded by June It is expected to host; o A Refinery, o An International Airport o A crude oil and products storage/ transmission hub, o Logistics warehousing o Energy-Based Industries, o Petrol Chemical Industries o Other associated facilities. Critical roads identified; UNRA fast tracking their development Airport Development; Technical proposal for the project is under review

29 INVESTMENT OPPORTUNITIES 29

30 INVESTMENT OPPORTUNITIES Future Licensing Reconnaissance Permits 80% of Albertine Graben unlicensed and other basins; SUDAN Impact Assessments (Environment, Social) to be undertaken 2017/2018; DRC Lake Kyoga Kadam-Moroto Basin Permitting/licensing of speculative companies 2017; Spec surveys 2017/2018; GoU to use data for promotion before licensing; L. Wamala Basin Lake Victoria Basin UGANDA KENYA 30 Spec survey costs 100% borne by Spec companies;

31 INVESTMENT OPPORTUNITIES(2) Upstream Opportunities Licensing Opportunities for Joint Ventures and Farming-in to existing and future licenses Service Provision Geophysical surveys, particularly nonexclusive seismic surveys in the unlicensed areas that will be undertaken in 2016 Specialised and logistical services in the various fields for: o Field development 31 o Oil and gas handling and transportation o Waste management and treatment Drilling in the Albertine Graben (Source: PEPD)

32 INVESTMENT OPPORTUNITIES(4) 32 Development of the oil and gas fields is expected to have two major Central Processing Facilities (CPF) in; o Kingfisher to process crude from Kingfisher and Kaiso Tonya o Buliisa to process crude from South and North of the Victoria Nile Each of these two major CPFs come with facilities that include among others o Construction of storage tanks for crude oil o Facilities for conversion of associated gas to power and Liquified Petroleum Gas (LPG) etc. o Construction of feeder pipelines Total Investments in the oil and gas sector are estimated in excess of $20 billion during the next 3-5 years Planned and possible CPF locations (Source: Tullow and PEPD)

33 INVESTMENT OPPORTUNITIES(3) Product Transport and Storage Infrastructure 211 km long pipeline from Hoima to Kampala, as part of refinery project. Pipeline routing study and Environmental baseline survey completed RAP study completed Q1 2017; acquisition of land for the right of way to follow. A bulk storage and distribution Terminal is to be developed NW of Kampala Other Regional Projects Extension of the 350km Eldoret Kampala oil pipelines Kampala Kigali oil pipeline 434 km Dar-es-Salaam-Tanga-Mombasa Natural gas pipeline. 33

34 INVESTMENT OPPORTUNITIES(5) Mid- and Downstream opportunities Service Provision 34 Capital for the emerging infrastructure such as the refinery and pipeline for transportation of crude oil and refined products Construction and operations of; o Utility systems for the refinery o Off-shoot industries for bitumen, petrochemicals and wax treatment o Pipelines, storage facilities and their attendant utilities Development of Hoima Refinery airport to facilitate logistics during and after the refinery construction Power generation using gas and crude oil; Product Distribution Outlets and supporting infrastructure. Wax Bulk Tar Lubricants Gaseous Fuel REFINERY Petro- Chemicals Petroleum Cake Asphalts Sulfur

35 CONCLUSION 1. Commercial exploitable resources of oil and gas have been confirmed in Uganda; 2. Uganda is implementing a robust Policy, legal, institutional and regulatory framework to guide the development of the oil and gas sector; 3. There is Regional Cooperation on development of required infrastructure for commercialization of oil and gas resources; 4. Investment opportunities abound, not only in the licensing of new acreage, but also in the midstream and downstream value chain; and, 5. The existing legal and regulatory regime, in addition to various incentives have created a conducive environment for investing in the oil and sector in Uganda.

36 Thank You Further Information; Director Directorate of Petroleum 36