Reports by Leo Odera Omolo
CHINA is increasingly looking beyond Africa’s established markets to tap into opportunities in Uganda, which is expected to become a crucial new frontier in the continent’s oil industry.
China strengthened its foothold in Uganda’s oil interests when it’s company, China National Offshore Oil Company (CNOOC) partnered with Tullow Oil and Total to develop the oil sector. The deal is, however, subject to the Government approval.
Chengyu and Karuhanga at the function last week
Uganda has confirmed petroleum resources in the Lake Albertine region, estimated at about 2 billion barrels.
Fu Chengyu, the CNOOC president, was in town last week to give a key note address at the launch of the Uganda Chamber of Mines and Petroleum (UCMP).
Chengyu was recently named the 13th most influential business leader in China Elly Karuhanga. The chamber chairman, said the partnership between Tullow oil, CNOOC and Total was a positive signal to investors, adding that the combined experience, technology and resources that the companies bring on board would take the oil sector to another level.
“This partnership makes Uganda an attractive investment destination. The multiplier effect of this collaboration will be reflected in opportunities created in the different sectors like infrastructure, accounting, transport, education, hotel business that will support the oil industry,” he said in an interview.
Tullow sold some of its stake in the oil fields to secure funding for the development of the fields.
“Further exploration by Tullow will require between $5b and $10b because it will be done on the lake. Tullow, therefore, needed to bring partners with more funds and experience to take the process beyond getting oil from the ground to refining, electricity generation and construction of an export pipeline.”
Karuhanga said the legal agreement with the Government and the three companies was expected to be concluded by April. This will pave way for implementation of the plans to develop the sector.
Fu Chengyu could not disclose how much investment his company would bring on board, but underscored the importance of human resource development.
“This is a huge project that will cost millions of dollars. However, I must emphasise that it’s not about the money, but transfer of knowledge and skills.”
Chengyu added that he expected strategic partnership between China and Uganda in the energy sector. “The success in developing our oil and gas sector would provide a useful model industry for establishing your own oil industry,” he said.
China is the second largest market for petroleum products and sixth largest producer of oil and natural gas. Uganda is expected to benefit from CNOOC’s expertise since it is China’s leading national oil company with an international footprint.
“We have been able to build a fully integrated operation from scratch, covering oil and gas exploration, development and production, refining, marketing, and engineering,” he added.
According to Chengyu, the company’s direct investments to Africa has exceeded $5b to date.“It’s our strong belief and our core principle that our investment must benefit the host nation, their people and the surrounding communities, while we realize reasonable returns”
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