Uganda signs agreement for the development of the Oil Refinery

KAMPALA, The Uganda Government has, through the Ministry of Energy and Mineral Development together with the Uganda National Oil Company, today entered into the Project Framework Agreement (PFA) the with Albertine Graben Refinery Consortium(AGRC) for the development of the oil refinery.

Government of Uganda selected the Albertine Graben Refinery Consortium to negotiate the Project Framework Agreement (PFA) for the development of the oil refinery. Theplan for the development of the refineryis in line with the Uganda National Oil and Gas Policy (2008) which provides for value addition and development of necessary infrastructure in the oil and gas sector.

Government of Uganda’sentry into the Project Framework Agreement(PFA) with theAlbertine Graben Refinery Consortium (AGRC) for the purposes of developing, designing, financing, construction, operation and maintenance of the oil refinery in Hoima district, marks a major milestone in the Country’s oil and gas sector.The signing of thePFAwill lead to the commencement of pre-Final Investment Decision (FID) activities such as Front-End Engineering and Design (FEED), Project Capital and Investment Costs Estimations (PCE), Environmental and Social Impact Assessments (ESIA), among others.

H.E President Yoweri Kaguta Museveni is committed to continuing a sustainable and desirable development of an oil and gas industry in the country in partnership with diverse group of private sector partners for the benefit of Uganda and the region. 

The Parties to the Agreement are: – (i) Government of the Republic of Uganda (Acting through the Ministry of Energy and Mineral Development), The Uganda National Oil Company Limited, YAATRA Africa (Mauritius), Lionworks Group Limited (Mauritius), Nuovo Pignone International SRL – A General Electric Company (Italy) and SAIPEM SPA (Italy).

Under the PFA, AGRC will be responsible for funding the pre-FID activities listed above and will proceed thereafter to construct and operate the refinery. The refinery is going to be developed as a commercially viable venture with a regional market focus. It will supply its products that will include kerosene, petrol, diesel, heavy fuel oils, among others to the Ugandan and regional markets. It is believed that this will not only improve access to these products but also create employment as well contribute to national development. The refinery is planned to have a 60,000 Barrels perDay refining capacity and will rely on crude oil from Uganda’s oil fields under development.

In recognition of the leadership and guidance provided by the President of Uganda,  His Excellency Yoweri Kaguta Museveni, MEMD, UNOC and AGRC will pursue the Refinery Project in good faith, with total transparency and in accordance with the following key objectives and guiding principles: (i) to deliver both economic benefit to the people of Uganda and other states in East Africa and value to private sector investors in the Refinery Project; (ii) to assist in the development of the overall oil and gas sector in Uganda; (iii) to commit sufficient resources and to adopt a coordination strategy for the development of the Refinery Project and the upstream sector in Uganda; and (iv) to structure the Refinery Project to maximise debt and equity financing from the private sector.

The Government of Uganda is also very pleased to expand its commercial ties with the United States of America and with that, the participation of American private sector companies in the development of the oil and gas sector and the wider Ugandan economy.  The friendship and long-standing support of the Government of the United States of America to Uganda’s economic growth is deeply respected and appreciated. 

During the term of the Agreement, the Albertine Graben Refinery Consortium (AGRC) shall establish a profitable and commercially viable refinery that delivers refined products to the market. The consortium will be required to raise the required finances for the Project and deliver a cost effective, technologically sound and environmentally compliant refinery design that creates jobs and skills development for Ugandans.

The Project will be implemented by a Special Purpose Company, the Refinery Company, to be incorporated by the Private investors and the Uganda Refinery Holding Company, a subsidiary of the Uganda National Oil Company. 

This milestone is a land mark in the commercialization of the country’s petroleum resources estimated at 6.5 billion barrels with an estimate of 1.4 – 1.7 billion barrels recoverable.