Uganda picks Russian-led consortium to build $2.5bn oil refinery - report

By bne IntelliNews February 17, 2015

Uganda has selected a consortium led by RT Global Resources, a subsidiary of Russia’s state-owned hi-tech corporation Rostec, to build and operate its first crude oil refinery, estimated to cost some $2.5bn, Daily Monitor, the country’s largest independent daily, reported, quoting sources from the energy ministry. The ministry is expected to make an official announcement later today.

The Rostec-consortium includes also Russian oil and gas company Tatneft, VTB Capital, the investment banking unit of sanctions-hit Russian state-controlled VTB Bank, and South Korean conglomerate GS Group. The only other bidder that reached the final stage of negotiations was a consortium led by SK Energy, part of South Korea’s conglomerate SK Group.

The winning consortium will finance 60% of the project costs, which include also the construction of a 205km product pipeline to Uganda’s capital Kampala and the necessary infrastructure, while the government will provide the balance. Hence, the predominantly Russian consortium will own 60% of the refinery, which is planned to be launched with a capacity of 30,000 barrels per day (bpd) by 2018. The capacity is set to be increased to 60,000bpd before 2020. The refinery will produce liquefied petroleum gas, diesel, petrol, kerosene, jet fuel, and heavy fuel oil.

Uganda’s petroleum products consumption stands currently at around 27,000bpd and is growing at an annual rate of about 7%. In East Africa, there is only one oil refinery, based in Kenya’s port Mombasa, which exports fuel to the region’s land-locked countries.

Uganda’s first oil field was discovered in 2006 and the country has estimated oil reserves of some 6.5bn barrels. Commercial production is expected to start in 2017 or 2018. The fields are developed by Tullow Oil, Total and China National Offshore Oil Corporation (CNOOC).

Related Articles

South Africa’s MTN fears sanctions may hinder profits repatriation from Iran

MTN Group, one of Africa’s biggest mobile operators, has said it will struggle to repatriate profits from its Iranian subsidiary MTN-Irancell if heavy sanctions are reimposed on Iran following ... more

Russia's Rosneft sets foot in Mediterranean with $1.125bn Eni deal

Russia's largest oil producer state-controlled Rosneft has acquired 30% in the largest natural gas field in the Mediterranean from Italian Eni, the company announced on October 9. Rosneft that ... more

PetroSA, Rosgeo sign $400mn oil and gas exploration agreement for South Africa

South Africa's national oil company PetroSA and Rosgeo, the geological exploration company of the Russian Federation, have signed an agreement on a $400mn oil and gas development project in South ... more