The recent agreement between the Ugandan Government and three International Oil Companies, calling for a 30,000Barrels Per Day refinery in Uganda, as well as export pipeline, is the deal that Tullow Oil has sought for the past five years. In the war of rhetoric with the Ugandan government, Tullow Oil had always insisted it could do a small scale refinery in Uganda but must build an export pipeline to export most of the crude. “The pipeline is key for Uganda to be number one on the queue for finance”, Aidan Heavey, the company’s founder and CEO, told the Ugandan Chamber of Mines and Petroleum last year.
The government, on the other hand preferred to have a large scale oil refinery, processing crude in excess of 100,000BOPD. At some point early in the debate, the government said it’d rather not have a drop of Ugandan oil exported until a refinery that could supply all of East Africa’s product needs was on ground.
These disagreements have influenced delay in final sanction for commercial oil production.
A statement published by the office of President Yoweri Museveni, on April 14, 2013, said the parties have agreed to start with the refinery size of 30,000 barrels per day,” The president reportedly stressed that he wanted a final deal quickly, in the form of a memorandum of understanding that would include the construction of a pipeline to neighbouring Kenya for exports.
“We have wasted too much time. We are now with the issue of oil for seven years. We need to make our final decisions,” Museveni reportedly told the oil companies and government officials.
Uganda may have backed down from requesting a 100,000+BOPD refinery, but the statement said that President Museveni still targets a refinery with an eventual capacity of 60,000BOPD.