Uganda plans key African refinery

Uganda is planning to build only the second oil refinery in East Africa by 2015.

Following the recent discovery of 2.5 billion barrels of oil, Uganda aims to develop a refinery in Hoima, according to Fred Kabagame Kaliisa, permanent secretary at the energy ministry.

The $2 billion plant should be able to produce an initial 20,000 barrels per day, rising to 200,000 over 30 years. A pipeline designed to export the country’s crude is also expected to be complete in four years and Uganda has identified the Democratic Republic of Congo, Rwanda, Burundi, Tanzania and Kenya as possible export markets.

At present, a refinery in the Kenyan port city of Mombasa is the only facility of its kind in East Africa, exporting fuel to Uganda, Rwanda and Burundi. But it only produces 32,000 b/d, compared to a capacity of 80,000, and in May suffered an external power failure that shut it down for a week. Essar Group, the Indian company that owns 50 per cent of the plant, has suggested plans to upgrade the 40 year-old facility to improve its efficiency and raise production.

“It is clear that demand for oil products in East Africa will continue to rise and the Mombasa refinery is well placed to meet this demand,” said Bimal Mukherjee, chief executive of Kenya Petroleum.

However, the Kenyan government seems less keen on modernisation, planning instead to import fuel from its neighbours once the Ugandan refinery starts.

Following the discovery of reserves at Albertine Graben in 2006, government analysts estimate that Uganda will be able to support the production of over 100,000 b/d for the next 20 years, making the country the primary oil producer in East Africa. “Uganda is a good trading partner and we expect to reach a good deal”, said Martin Heya, Kenya’s commissioner for petroleum to Dow Jones Newswires in May.