21-07-08 The Government has signed an agreement with a British Oil company, Tullow Uganda, to build a refinery in the oil rich Albert region. The company is expected to start the infrastructure development for the refinery early next year.
“Tullow is going to set the topping plant (mini-refinery) at its own cost and then recover the money from oil revenue,” said the commissioner for petroleum exploration and production, Reuben Kashambuzi.

He said Tullow was evaluating the bids from companies interested in building the plant, adding that only international firms had applied. Kashambuzi said Tullow intended to build a 4,000-bpd mini-refinery and a 50 MW power plant when it begins producing oil next year.
He was, however, tight-lipped on how the oil revenue would be shared between the company and the country.

“Unfortunately, we have been prevented from giving you that document because it has been classified as confidential,” Kashambuzi said. “But what I can tell you is that the agreement has beenmade in such a way that the Government has not been cheated. The interest of the country has been taken care of.”
The early production will basically be for local consumption. It will cover the region of Kaiso-Tonya area, Block 2 and parts of Lake Albert.

Kashambuzi said early oil production was necessary to establish the level of viability and to access diesel, kerosene and aviation fuel.
The production is set to start in the last quarter of 2009. The production system will have a separation plant, water injection facilities, a crude topping unit to produce petroleum distillates and heavy fuel oil products and storage facilities. At the start-up, the well development programme will consist of six wells with flowlines.

Kashambuzi said the project has been designed to produce about 4,000 bpd of heavy fuel oil and petroleum products. The company will also set up a power plant to run on heavy fuel oil, with capacity to supply the plant and the neighbouring area.
Kashambuzi said the early production would also enable the Government to begin studying the behaviour of reservoirs that will help in the design of the diesel refinery. But the company is yet to receive approval from the National Environmental Authority (NEMA) for the plant. NEMA boss Arymanya Mugisha said the authority would hold a public hearing in Hoima district, which will form the basis of its decision.