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Sustainable utilization of the oil and gas resources in Uganda through value addition

Energy is one of the key drivers of economic growth and development world over. Overcoming energy poverty is among the world’s greatest challenges. All the countries in the East African Region (EAR) do not produce sufficient energy to meet their current needs. However, petroleum products consumption in the region is steadily growing, despite climate change activism.

The discovery and confirmation of commercial oil and gas reserves in Uganda in 2006 presented an opportunity to positively impact the energy situation in the region. As enshrined in Uganda’s National Oil and Gas Policy of 2008, the desire of Government is to use oil and gas resources, to contribute towards poverty eradication and create lasting value to society.

Uganda’s commercialization strategy; East Africa Crude Oil Pipeline (EACOP) and the Refinery

Uganda’s commercialization strategy for its resources provides for both in-country refining, and crude oil export. Front End Engineering and Design (FEED) studies for both projects have been undertaken and approved by Government.  The studies provide for the development of a 60,000 barrels per day refinery in Hoima, and a 219,000 barrels per day a capacity crude oil export pipeline from Kabaale in Uganda to Tanga in Tanzania.

Both projects are economically feasible and offer various benefits. The development of the refinery and the EACOP projects are being undertaken co-currently, and when both projects are operational, the refinery will have a right of first call on the produced crude oil. Having both projects will ensure continuity in production, especially during periods when either project may be shut down for maintenance.   The crude export pipeline will provide an outlet for produced oil to international markets to ensure return on investment for the licensees and Government. The EACOP is also expected to provide an alternative import route for the goods destined to Uganda and the surrounding region.

Progress of the Refinery Development

Sustainable utilization of the discovered resources, through value addition by refining is key in addressing not only the present but also future energy challenges in the region. An oil refinery will not only provide an outlet for the discovered crude oil resources and enhance energy security, but it will also create employment opportunities for the local workforce.

Since the discovery of oil reserves, Government has made great strides towards the development of an oil refinery in Uganda, through a careful process that takes care of the social, environmental, and safety concerns. Government of Uganda, commissioned Foster Wheeler Energy Limited to undertake a feasibility study for the development of a refinery to refine crude oil from the discoveries in Uganda. The study, finalized in 2011, determined that a 60,000 barrels per day refinery is a viable project.

In 2018, Government of Uganda (represented by the Ministry of Energy and Mineral Development), signed a Project Framework Agreement (PFA) with Albertine Graben Energy Consortium (AGEC), in relation to the designing, financing, construction and operation of a 60,000bopd refinery at Kabaale in Hoima district.

Consequently, the Refinery Developer embarked on the Front-End Engineering Design (FEED) for the project, which was completed and submitted to Government for consideration. Government has reviewed the FEED and the Refinery project has been confirmed to be safe, technically sound, and environmentally compliant. As required by law, the developer has also carried out an Environmental and Social Impact Assessment (ESIA), which is being used to validate the design by ensuring that the necessary measures to protect the people and the environment have been carefully and adequately considered during the design process. The ESIA will be submitted to the National Environment Management Authority (NEMA) for approval later this year.

The Final Investment Decision for the Refinery Project is expected in 2023 following which the Project will proceed to the Detailed Engineering, Procurement and Construction Phase leading to Refinery commissioning in 2027.

The project has been designed as a robust, technically feasible and economically viable refinery, with deep conversion capabilities that can convert Uganda’s medium-heavy crude oil into high quality products. The design has adopted some of the advanced technologies that have been developed over the years to refine heavy crude oil and upgrade residue oil, using carbon rejection, hydrogen addition or a combination of both, to process crude oil into finished products by breaking heavy molecules into their light components, and selectively re-configuring them into new high-quality products.

Such products will include Liquified Petroleum Gas (LPG), diesel, gasoline, jet fuel, kerosene, Heavy Fuel Oil (HFO), which will not only meet the international products specifications but also fall within the permitted emission limits thereby taking into consideration any environmental concerns related to products’ emissions. The design has also ensured that by-products such as petroleum coke, that are not environmentally friendly are not produced.

Risk analysis has been carried out for all the phases of the project including construction and operation phases of the refinery to identify any potential risks to people, property or the environment and the necessary mitigation measures have been included in the designs.

Energy efficiency improvement measures such as heat integration techniques have been considered during process optimization. These will ensure efficient utilization of energy by burning less fuel to generate the required energy, thereby minimizing environmental effects.

CONCLUSION

The development of an oil refinery in Uganda will boost the region’s refining capacity and ensure the security of supply of petroleum products especially for the inland markets. Besides being a strategic investment for the country and the region, an in-country refinery will improve Uganda’s balance of payments by reducing the petroleum products import bill and reduce the greenhouse gases footprint of the trucks that bring in white products over long distances. The refinery will, in addition to the white products, generate Liquefied Petroleum Gas (LPG) that will help offset the use of biomass for domestic cooking and some industrial operations, thus protecting the environment.

The Ugandan refinery will also produce feedstock for the possible future development of the fertilizer industries in Uganda as offshoots of the petroleum industry, thus enhancing and promoting agriculture.

The activities on the refinery development in Uganda are being carried out systematically, with careful studies and assessments, to ensure that they meet the best petroleum industry practice, comply with the laws of Uganda, minimize the impacts to the environment, and above all, create lasting value to the people of Uganda.

This article was co-authored by Dozith Abeinomugisha, Director Midstream and Benjamin Ariho, Senior Petroleum Officer, Refining

Source: PAU website.

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