Progress of Refinery and Associated Infrastructure Development in Uganda.pdf

7/30/2019 Progress of Refinery and Associated Infrastructure Development in Uganda.pdf

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Irene BatebePetroleum Officer - Refinery

PETROLEUM EXPLORATION AND PRODUCTION DEPARTMENT

MINISTRY OF ENERGY AND MINERAL DEVELOPMENT

PROGRESS OF REFINERY AND ASSOCIATED INFRASTRUCTURE

DEVELOPMENT

BREAKFAST METING FOR EDITORS AND SUB-EDITORS

16th

APRIL 2013PROTEA HOTEL, KAMPALA


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PRESENTATION OUTLINE

1. Background

2. Commercialization plan for oil and gas resources

Short term plan

Medium term plan

Long term plan

3. Status of key activities in Refinery Development

4. Challenges

5. Concluding remarks

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1. BACKGROUND

Promotion & licensing Exploration Development

Production

Decommission

Bulk Transportation

Refining

Gas conversion

Distribution

Marketing

Sales

Upstream Midstream Downstream

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Backgroundcontd

Refining process

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- Conversion of crude petroleum into useful petroleum products

Refinery design is influenced by

type of crude oil and expected

products

Lighter crude easier to refine

than heavy crude oil

Refinery comprises of several

units

Each refinery has a unique

design as well as operating

characteristics


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Background contd

Ugandas crude oil is medium - light and sweet.

Sulphur content 0.1 0.2% and API gravity 20 330

Petroleum product market demand is diesel driven with a ratio of 2:1

(diesel : gasoline)

Region boasts of growing product market

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Key drivers for refinery design

0

1

2

3

4

5

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Ugandan

"Average"

Maya Brent Bonny Light Arab light

Sulphur levels comparison

0%10%20%30%40%50%60%70%80%90%

100%Light Naphtha

Heavy Naphtha

Kerosene

Diesel

VGO

Vac Residue

Make up of Ugandan Crude Compared to

some other typically traded crudes


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Refining Pictorial

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Main process unit RFFCU

Gasoline storage LPG storage


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Refinery Complex


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Background contd

Ugandas demand for petroleum products isabout 30,000 bbl/day

The region product consumption is about 200,000

bbl/day with a growth rate of 7%.

The East African region has only one refinery of70,000 bbl/day at Mombasa operating at half

capacity.

Product importation is faced with several

challenges: Reduced security of supply

High import bill (est. 2 billion n USD)

There exists a Regional Refineries Development

Strategy to boost the regions refining capacity

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Backgroundcontd

The National Oil and Gas Policy (2008)

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The National Oil and Gas Policys goal is to use the countrys oiland gas resources to contribute to early achievement of povertyeradication and create lasting value to society

The policy provides for ;-

9 Plans to undertake medium and large scale refining to the satisfaction ofnational and regional petroleum products requirements in line with thecountrys policy of value addition.

9 Optimal production of the countrys oil and gas resources through costeffectiveness

Building a refinery in Uganda is in line objective No. 4 of the Policywhich is to promote valuable utilization of the countrys oil and gasresources.


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2.0 GOU Commercialization Plan

A. Short term plan (0 3 years)

9 Crude oil and gas for power generation until the refinery is operational

9 Extended Well Test crude oil for power generation, industry, etc.

9 Improvement of transport and infrastructure.

B. Medium term plan (3 6 years)

9 Oil refinery development (60,000 BOPD)

9 Support transport and storage infrastructure development

C. Long term plan ( > 6 years)

9Expansion of refinery

9 Development of associated industries and support the energy based

industry

9 Consideration of export options (for excess crude oil)

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Feasibility of refinery development

Detailed feasibility study for refinery development was conducted in2010/11 and it assessed;

Crude production potential

Size and configuration of the refinery

Location

Financing options

Social and environmental assessment, etc.

Study analysed the option of crude export pipeline Vs refinerydevelopment.

It was concluded that refinery development is more economically

feasible and beneficial to Uganda.11


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Petroleum product market

Source: Feasibility study for refining, MEMD

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The growing national and regional product demand is one of the key drivers for therefinery size and design options

Product demand forecast to circa 370,000 BOPD by 2030 for the EAC region


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Benefits of Refining to Uganda

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9 Contribution to the countrys

growing energy requirement and

mix (source of HFO and LPG)

9 Creation of jobs for Ugandansand transfer of Technology in the

refining and associated

industries

9 A refinery is a strategic

development that willsignificantly enhance the

competitiveness of the nation

and the East African region at

large.

9 Ensure security of supply for

petroleum products

9 Boost the regions refining

capacity

9 Improving the countrys

balance of payment by

reducing the petroleum

products import bill

9 Enable rational exploitation of

the resource to support

sustainable development


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Refinery Ownership

Refinery will be developed on a Private Public Partnership (PPP) basis through ajoint venture company with a proposed 40:60 sharing between public and private

entities, respectively

Higher participation share (60%) provides confidence to investors for funding and

also operation of the industry.

EAC Partner states have been proposed to participate with up to 10 % out of the

40% public shares.

Consultations with the Partner States have commenced to establish the best

participation arrangements.

A special purpose vehicle (Refinery company) will be formed to take forward the

development and operation

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STATUS OF KEY ACTIVITIES IN REFINERY

DEVELOPMENT

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Legal and regulatory framework

A Petroleum Bill for Refining, Gas conversion, Transmission and Storage was passed byParliament in February 2013.

The Bill seeks to;

Facilitate investment in petroleum processing, transportation and storage facilities

Promote equitable access to petroleum facilities,

Provide for Health, Safety and Environmental compliance, among others

Regulating the development, installation, operation and maintenance of suitable refining, gas

processing, transportation and storage facilities.

Provide security of petroleum processing, Transportation and storage

The Bill expected to be assented to by the President this year

The process of formulating the ensuing regulations has commenced.

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The feasibility study assessed six potential sites and

Kabaale parish, Buseruka sub-county was found to bethe most suitable

The land covers 29 sq.km in approximately 13 villages

The land will accommodate the refinery, an aerodrome,

waste management facilities, future associatedindustries such as petrochemical industries, staff

quarters etc.

The land acquisition process has progressed with the

following activities:-

9 Sensitization of local residents

9 Demarcation of land boundaries that was conducted by

Department of Surveys and Mapping from MoLHUD.

9 The RAP study was completed and compensation/resettlement

will soon commence. 17

Land acquisition process


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Infrastructure for transportation and storage

This includes the upstream and refined product

pipeline and storage facilities which will berequired.

Crude oil transportation

A study to evaluate the pipeline and storage

facilities for crude oil and gas in Uganda hasbeen concluded.

The study conducted by Fitchner MEI Oil

assessed two pipeline routes;

Northern (96km,16 inch)

Southern (46km,12.75 inch)

The Ministry is in the process of seeking

Cabinet approval on the ownership structure. 18

Source: Feasibility study for refining, MEMD

Crude transportation from oil fields to refinery

Refinery

Refined

products

pipeline


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Infrastructure ..cont

Refined product transportation

A multiproduct pipeline is required to transport refined products from theRefinery to a distribution terminal at Kampala.

A feasibility study on distribution and storage facilities for petroleumproducts from the refinery to the respective demand centers is being

conducted.

Following completion of the study, the Ministry will embark on sourcingfunding /investors to develop required pipeline

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Kampala Terminal

Multiproduct pipeline

Refinery

(Hoima)Pumping Stn


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Transaction Advisory (TA) Services

GoU procured a US based Energy Investment Financial Advisory firm Taylor-

DeJongh to offer Transaction Advisory services.

The Transaction Advisor will among others;

Recommend the appropriate ownership for the refinery and the associated elements,

including; crude and product pipelines terminal

Evaluate and recommend the best ownership structure for the refining company.

Evaluate alternative project financing structures and design a suitable financing plan

geared towards obtaining the required finance for the oil refinery project

Evaluate financial implications for Government of Uganda of different corporate and

commercial frameworks for the refinery company

Together with Government, source for the lead investor and financing for the refinery


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Environmental Baseline study

The Ministry is undertaking an Environmental baseline study

The study will characterize the current environmental and social conditions in

and around the refinery land.

The study will serve as a basis for measuring and monitoring of the future

impacts.

GIDS CONSULTS LTD was procured to undertake the baseline study.

The study commenced in December 2012 and a final report is expected in April

2013.

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Capacity development

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Government recognises the need to develop human resource capacity to handlethe new areas related to refining.

A total of six officers have so far trained at Masters Level in Refinery Design and

Operations in the UK.

Three officers have commenced training at Masters Level in refinery and pipeline

related areas in the UK.

There is need for capacity building for artisans and technicians who will be required

at the construction stage of the refinery.

The Ministry plans to engage Uganda Petroleum Institute of Kigumba (UPIK) and

other institutions of higher learning to consider incorporation of refining course units

in their curriculum.


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Refinery Development Schedule

Governments roles

Investors roles

2010/2011 2012/2013 2012/2013 2013 2013/2014

2014 2014/2015 2016 2018 2022 >2022

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Feasibility

study Land acquisition

Project promotion

Environmental

baseline survey

Logistics study

Identify

developerFID

EIAFEED

EngineeringProcurement

Construction

CommissionFirst train

30,000 bbl/d

Expansion 160,000 bbl/d




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Challenges/constraints

i. Anxiety among the PAPs in refinery land; The residents in the refinery land

are very anxious about the planned compensation/resettlement

ii. Public anxiety; There is alot of public anxiety regarding the overall refinery

development. This is being addressed through sensitisation programmes with

relevant audiences such as journalists, Members of Parliament, etc.

iii. Misinformation from NGOs; They tell communities that Government is out to

grab their land without adequate compensation undermine Government efforts

of sensitizing communities

iv. Limited expertise in the country; Refining is a new area, and there is

therefore need for the industry to develop enmasse capacity among the general

public through knolwledge transfer and trainings


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CONCLUDING REMARKS

i. Governments policy is to add value to the crude oil resource discovered in

the country and this will be dependent on the confirmation of reserves.

ii. The feasibility study for refining demonstrated that the refinery was more

viable compared to a crude export pipeline

iii. The growing national and regional petroleum products market provides a

significant opportunity for the development of a refinery in Uganda.

iv. Government has progressed significantly in the refinery development plans.

v. Efforts from different stakeholders to support the development is required

given its benefits to the country.

vi. Government is prioritising the development of infrastructure required to

develop the oil and gas resources discovered in the Albertine Graben. 25


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Further Information;

COMMISSIONER

PETROLEUM EXPLORATION AND PRODUCTION DEPARTMENT

[email protected]

[email protected]

www.petroleum.go.ug 26

THANK YOU!!
mailto:[email protected]:[email protected]

Documents

Progress of Refinery and Associated Infrastructure Development in Uganda.pdf