What interest does UNOC have in the Tilenga and Kingfisher Projects?
The Tilenga Project is in the north of Lake Albert and constitutes License Areas (LA) 1 and 2. Total E&P Uganda B.V (TEPU) and Tullow Uganda Operations Pty Limited (TUOP) are Operators for LA 1 and LA 2 respectively. The Kingfisher Development Project (KFDA) is located in the southeastern part of Lake Albert. China National Offshore Oil Corporation Uganda Limited (CUL) is the Operator. UNOC is mandated to hold and manage 15% State participating interest in the above stated projects. UNOC is currently negotiating the back-in into the Joint Operating Agreements (JOAs) that is required to allow for the State Participation in the above Projects. Signing of the JOA will enable UNOC to take an active part in project investment decision making through the JV Partners’ Operating Committee Meetings, including sanctioning of work programs, budgets, contracts and expenditures.
What is the new shareholding arrangement following the purchase of additional interest in the Lake Albert projects?
Currently CUL and TEPU are in discussions with Government to finalise the acquisition of an additional 21.57% of TUOP’s shares in the Blocks 1, 2 and 3A. This follows an announcement in January 2017 by TUOP and TEPU in which TUOP agreed to farm out of 21.57%. This implies that TEPU and CUL will each have 37.5% interest while TUOP and UNOC will have 10% and 15% respectively once the discussions with Government for approval of the transaction are completed.
What are the objectives of these projects?
The overall objective of the Tilenga and Kingfisher Projects are to establish production of the oil fields in an economically prudent manner using sound reservoir management principles and best industry practice. This includes ensuring the safety of workers and the public and limiting as far as practicable adverse environmental and social impacts of the projects’ activities, enhancing the beneficial impacts, and also seeking to achieve a net gain in biodiversity and ecosystem services as relevant, in compliance with national laws.
How will the two projects contribute to the social and economic development of Uganda?
The development of the project will stimulate accelerated economic growth, job creation, and contribute towards poverty eradication and general prosperity to the people in Uganda. Anticipated benefits for the country include: 1. Increased revenue for Uganda leading to national economic growth. 2. Improved infrastructure such as roads and job opportunities (skilled and unskilled). 3. The projects are also anticipated to provide businesses with opportunities to supply goods and services to the oil companies and their conractors. 4. Improved accessibility within he projects’ areas due to upgrading of access roads and construction of new roads; 5. Direct and indirect employment opportunities. It is expected the majority of the non-skilled workforce will come from nearby villages and towns. 6. Increased demand for goods and services stimulating economic growth. 7. Development of more educated and skilled workforce through training and skills development for affected communities and project workers. 8. Community empowerment and increased community participation in decision-making.
When should we expect first oil?
First oil should be achieved about three (3) years after the Final Investment Decision (FID) has been undertaken. The FID will trigger to the project execution and construction phase of both upstream and the East African Crude Oil Pipeline Projects. All parties are fully committed and are endeavoring to achieve this in the shortest timeline possible. Together the partners and the Government have adopted a fast track approach to the development of Uganda’s oil resources in the most efficient and robust manner.
Why is FID important?
The FID is a decision that is reached by the partners in order to proceed with the project execution The FID is made upon the completion of various requirements that include but no limited to acquisition of appropriate environment and land authorisations, financing arrangements and completion of infrastructure designs.
With inadequate funds from government how will the company play its role in exploration and various investment programs requiring large capital or funds?
Government is looking at different ways to provide seed capital to UNOC to enable it participate in different projects that require funding. The plan is to ensure that UNOC is financially self-sustaining in the medium and long term.
In relation to existing Production Sharing Agreements (PSAs), the participating interest of UNOC is carried by the International Oil Companies. UNOC will however be required to answer its cash calls at when the carry period ends. We are working with the Government to ensure that a financing plan is in place before these obligations become due.
What measures are put in place to mitigate environmental impacts once activities ramp up in the National Park?
The Joint Venture Partners have made a clear commitment to applying international best practices in addition to national regulations and our internal policies to develop the oil resources, particularly the International Finance Corporation (IFC) Performance Standards (PS), also known for being the most stringent standards on environment and including biodiversity. IFC PS requires us to implement the mitigation hierarchy of: avoiding any unnecessary impacts, minimizing the unavoidable impacts, restoring impacted areas and offsetting residual impacts with an aim of achiving a No Net Loss and Net Gain for qualifying biodiversity values of the oil and gas projects while conserving the ecological value of the Murchison Falls National Park. We recognize the key to achieve this objective are three main considerations: 1. Thorough understanding of the ecological context of the area of operation through long-term baseline and monitoring studies. 2. Landscape connectivity and approach, to effectively manage indirect and cumulative impacts. 3. Collaborate management of impacts with public/private partnerships and stakeholders for landscape level suitable development.
What is the East African Crude Oil Pipeline (EACOP)?
The East African Crude Oil Pipeline is a 1,443 km crude oil export infrastructure that will transport Uganda's crude oil from Kabaale - Hoima in Uganda to the Chonoleani Peninsular near Tanga in Tanzania for export to international market. This major export system (296 km in Uganda) and 1,147 km in Tanzania) comprises of 24" insulated buried pipeline, six pumping stations, to pressure reduction stations and a marine export terminal.