Uganda finally signs an agreement with investors to build its first oil refinery

Uganda has signed a deal with the Albertine Graben Refinery Company (AGRC), a consortium of international oil companies led by America’s General Electric Co., to build and operate its first oil refinery in Hoima district in Western Uganda. This comes after two unsuccessful attempts to sign a deal.

According to a statement from the president’s office, the deal for the 60,000 barrel per day plant will cost between $3 billion and $4 billion and it would “ensure development, design, financing, construction, operation, and maintenance.”

The AGRC comprises of  YAATRA Africa (Mauritius), Lionworks Group Limited (Mauritius), Nuovo Pignone International SRL (a General Electric Company located in Italy), SAIPEM SPA (Italy) and the Uganda National Oil Company (UNOC), which is a limited liability petroleum company owned by the government.

Under this agreement, AGRC will be responsible for funding the pre-Final Investment Decision (FID) activities, which includes Front End Engineering and Design (FEED), Project Capital and Investment Costs Estimation (PCE), Environmental and Social Impact Assessments (ESIA). These activities are expected to commence immediately.

When the refinery starts production it will focus on the regional market and will supply products like kerosene, petrol, diesel, heavy fuel oils, among others.

According to a Ugandan news site, the independent, the entire project will be implemented by a Special Purpose Company which will be incorporated by AGRC.

It would be recalled that Uganda first awarded the refinery contract to a Russian company RT Global Resources in 2015, but the deal was suspended in 2016. The contract was then awarded to a group led by SK Engineering & Construction Co. of South Korea but it also never took off.

Uganda first confirmed the existence of commercially viable petroleum reserves in 2016 and it is estimated to have about  6.5 billion barrels of oil deposits with an estimate of between  1.4 and 1.7 billion barrels recoverable.