By Daniel Mwesigwa
As Uganda moves closer to have the country’s first oil flow out of the ground by 2025, a beehive of activities are happening after the launch of the oil projects in April 2021.
Data from the Petroleum Authority of Uganda shows that the licensed companies have concluded the procurement process and granted contracts for the Tilenga and Kinsgfisher projects.
For instance, the Tilenga main Engineering Procurement Supply Constructon and Commissioning (EPSCC) contract was awarded to the consortium of McDermott/Sinopec. McDermott and Sinopec commenced the work and are currently taking forward detailed engineering and other activities in London, UK, Beinjing, China and Gurugram, India.
In addition, 10 contracts for drilling and management of wells for the Tilenga Project were awarded.
- ZPEB Uganda Company Limited won the contract for construction of the drilling rigs, and the detailed design of the drilling rigs has commenced. These rigs are to be used in drilling up to 426 wells, scheduled to commence in the last quarter of 2022.
- Directional Drilling, Logging while Drilling, Drilling Bts and Real Time Operations to Schluberger.
- Electrical Logging to China Outfield Services Ltd (COSL).
- Casting and Tubig (OCTG) to Vallourec.
- Wellheads and Xmas Trees to Schlumberger.
- Lower Completion to Schlumberger.
- Upper Completion and Artificial Lift to Schlumberger.
- Mud Logging to Excellence Logging (Exlog).
- Drilling Fluids, Cementing and Solids Control to China Outfield Services Ltd (COSL).
- Drilling Waste Maagement to EnviroServ
The contract for civil works to prepare over 700 acres of Industrial area for ilenga was awarded to Mota Engil Uganda. These works include bush clearing, fencing, construction of rainage and internal roads and preparation of the ground to host different facilities.
The facilities to be hosted in the industrial area include the Central Processing Facility (CPF), Construction Camps, Drilling Support Bases, and Operation Supports Bases, among others.
Mota Engil Uganda has sub-contracted various Uganda companies including Gauff Consultants, Prand Engineering, Civtec, and Fabrication Systems among others to undertake some of tese works.
According to PAU, preparation of the Tilenga Industrial site was at 35% completion at the end of 2021 and is expected to be concluded by mid-2022.
A contract for construction of pads on which the wells for the Tilenga project will be drilled was awarded to Mota Engil Uganda Ltd. Tis contract includes preparation of 31 well pad sites, installation of conductor pipes and construction of well cellars among others. The work is expected to commence in the first quarter of 2022, in preparation for the commencement of development drilling in the last quarter of 2022.
A contract to design and construct a permanent camp, supply base and safety/security check station, Kingfisher Project EPC – 2 infrastructure facilities was awarded to China State Construction Engineering Corporation Ltd (CSCEC).
PAU Executive Director Ernest Rubondo says that some of these companies, which have been awarded Tier-1 contracts include some of the biggest and well-established engineering companies in the world.
Rubondo says that they also have significant capital bases and enormous experience.
“This is a significant achievement, as these Tier -1 contracts, with large market capitalization, are expected to set up base in the country,” Rubondo says.
Following the launch of the projects, contracts worth US$ 6 billion for over 40 work packages and contracts for Tilenga, Kingfisher and EACOP projects have been submitted by the licensees to the PAU for approval before award.
The total budget aproed for all licenses ere US$ 180 million for January to December 2020, US$ 500 million for January to December 2021 and an expected US$ 3 billion for 2022.
“This growth in investment in the sector is attributed to a significant increase in the activities in the sector following conclusion of the required agreements on the launch of the projects,” Rubondo notes.
According to Rubondo, oil project remain economically viable in the prevailing crude oil price environment.
This, he said is mainly driven by the low cost of finding and developing the resources.
The Authority estimates that the current project technical costs are below US$ 20per barrel and the break-even cost at a 15% discount rate, is below US$ 35 per barrel.