KAMPALA Uganda--China's Cnooc expects to start first crude
output at its Ugandan Kingfisher oil field in late 2018, nearly a
year later than expected as the foreign companies developing the
country's oil sector struggle with infrastructure bottlenecks, a
company executive said Wednesday.
First output from the $2 billion oil field isn't expected until
late 2018, as the company moves to complete a number of
pre-development infrastructure projects, including access roads,
pipelines and an airstrip in the remote Lake Abertine rift basin,
according to Jin Weigen, Cnooc vice president in charge of
finance.
The delay is the latest setback to hit Uganda's nascent oil
industry, whose development has been held back since 2009, due to a
number of hurdles, ranging from tax disputes between government and
oil companies to disagreements over development plans and refining
options.
"We expect first crude by the end of 2018, but this will also
depend on the completion of a crude pipeline to the refinery" Mr.
Jin said.
The Ugandan government granted its first oil production license
to Cnooc in September last year and output from the
635-million-barrel oil field was expected to begin by 2017,
supplying a planned 30,000 barrels-a-day oil refinery.
Crude from the oil field is supposed to be transported along a
50-kilometer pipeline to the refinery, and the completion of this
project is key for the timing of production, Mr. Jin said. The
Cnooc executive was speaking at the sidelines of a news conference
addressed by the company's joint venture partners in the project,
Total and Tullow Oil.
Bernard Ongodia, the head of geophysics at the state Petroleum
Exploration and Production Department told reporters that the
government would announce a contractor to build the oil refinery in
September, to pave way for development of the refinery and
associated infrastructure projects. The contractor was initially
expected to be selected by June, but the process has been pushed
back after bidding companies asked for more time, Mr. Ongodia
said.
Cnooc and Total entered Uganda in 2012 after acquiring a 66%
state in three oil licenses previously owned by Tullow for $2.9
billion.
Jimmy Mugerwa, Tullow Uganda's general manager said that the
three companies are planning to invest at least $12-15 billion to
develop the oil assets over the next 4-5 years. The government has
granted a production license to Cnooc, but Total and Tullow are
still waiting for final approval for production licenses of at
least nine oil fields.
The companies plan to build a 1,200-kilometer crude export
pipeline to the East African coast, from the land locked
region.
Last month, Tullow announced that it plans to sell its stake in
the Ugandan oil field.
Total, Cnooc and Tullow said in a statement that as the country
transits from exploration to development phase, government and
local suppliers are yet to create "operational readiness" to
benefit from the industry.
Uganda's crude output is expected to peak at around 230,000
barrels-a-day by around 2020.
Write to Nicholas Bariyo at nicholas.bariyo@wsj.com
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