NATIONAL CONTENT IN UGANDASOIL

AND GAS SECTOR

Presentation at the African Centre for Media excellence
Kampala
Ronald Goboola
National Content Development Officer

Petroleum Directorate
Ministry of Energy and Mineral Development, Uganda

8 December 2015
th

Directorate of Petroleum, Uganda.

PRESENTATION OVERVIEW
Introduction
Status of the oil and gas sector in the country
Resource Utilization Strategy for Uganda
National Participation

Opportunities for Ugandans

Challenges for National Content in OGS
Way-forward
Conclusion.

Directorate of Petroleum, Uganda.

1.0 INTRODUCTION
The Petroleum Value Chain:
LICENSING
EXPLORATION
DEVELOPMENT
PRODUCTION

UPSTREAM

TRANSPORTATION
REFINING
GAS PROCESSING

MIDSTREAM

DISTRIBUTION
MARKETING
SALES

DOWNSTREAM

Directorate of Petroleum, Uganda.

INTRODUCTION
TAKING A CLOSER LOOK AT THE MIDSTREAM AMD DOWNSTREAM
SEGMENTS OF THE PETROLEUM INDUSTRY

Midstream and Downstream represent a domain for value addition to

petroleum resources through:
Taking the resources closer to where they have higher value
transportation
Converting them into valuable products refining and gas
processing
Ensuring access to the products by the consumers distribution,
marketing and sale

2.0 STATUS OF THE PETROLEUM SECTOR IN UGANDA

PETROLEUM POTENTIAL: UGANDAS SEDIMENTARY BASINS

The country has got six sedimentary Basin

Albertine Basin-The most prospective

Hoima, Kyoga and Moroto Kadam Basin- Under

investigation

Wamala and Lake Victoria basin-shallow Basin

2.1 ACREAGES/LICENCES

Four (4) Active Production Sharing Agreements (PSAs)

3 License Operators (Tullow, TOTAL and CNOOC)
Change from small oil companies to super independent and major
oil companies i.e. Heritage, Dominion, Neptune, and Energy Africa.
To major companies i.e. CNOOC, TOTAL E&P Uganda, Tullow
Uganda Operations Pty Ltd.
2.2 RESOURCE BASE

To-date, Government has made twenty one (21) discoveries of which four (4)
(Taitai, Karuka, Ngassa and Turaco) have been considered sub-commercial by
industry and have been returned to Government.
One (1) production license over the Kingfisher field was issued in 2012 which
is now being operated by China National Offshore Oil Corporation.

Three (3) applications for production licenses by Tullow Uganda Operations

Pty Ltd. (Tullow) and five (5) applications for production licenses by Total E&P
Uganda Ltd (TOTAL) were received by Government and are being reviewed in
consultations with the applicants.
The last discovery by TOTAL is still under appraisal stage before the company
applies for production license

Over 6.5 billion barrels of (stock tank oil initially in place ) STOIIP
established

Over 1.4 billion barrels of recoverable petroleum resource

Over 80% of the Albertine Graben is now unlicensed

2.3 MOVING INTO DEVELOPMENT;

Company makes a discovery is given 2 years to appraise and

make an application.
Application is accompanied by Field Development Plans and
Petroleum Reservoir Reports.
Contents outlined in section 71 of the Petroleum Exploration,
Development and Production Act, 2013.
Extensive discussions on FDP and PRR held between Govt and
the IOCs prior to approval.
Kingfisher field is in development phase.

3.0. RESOURCE UTILIZATION STRATEGY

FOR UGANDA
UGANDAS STRATEGY FOR THE SHORT, MEDIUM AND LONG TERM
DEVELOPMENT OF THE MIDSTREAM AND DOWNSTREAM SUB-SECTORS
SHORT TERM
Use of crude oil and gas for power
generation
MEDIUM TERM
Phased development of a 60,000 BOPD
refinery
Infrastructure development
Development of a crude oil export pipeline
LONG TERM
Potential expansion of the refinery
Development of petrochemical and energybased industry

4. LOCAL CONTENT IN THE UGANDAN

CONTEXT
The Ugandan perspective for Local Content, a.k.a National Content,
embraces the following definition:

value addition to the [Ugandan] economy through the use

by the petroleum industry of materials produced or available
in Uganda and services provided by Ugandans and
Ugandan firms Draft National Content Policy.

Ultimate goal: In-country value creation and retention

whilst ensuring competitiveness, efficiency and attraction of
foreign talents in specialized trades.

Directorate
Direc6
t torateof
of Petroleum,
Petroleum,Uganda.
Uganda.

4.1 THEMATIC ELEMENTS IN UGANDAS

LOCAL CONTENT POLICY FRAMEWORK
Ugandas Policy framework is underpinned by the following
Themes:

Employment of
Ugandans

Local Enterprise
Development

Procurement of Local
goods & services

National
Content
Development
Enhancement of
Vocational and
Higher Education
training
Directorate
Direc7
t torateof
of Petroleum,
Petroleum,Uganda.
Uganda.

Measurement and
Monitoring of
National Content

The interaction between various stakeholders is therefore key.

NB. The Draft policy has been finalized

and pending approval by Cabinet

Directorate of Petroleum, Uganda.

5.Other initiatives to enhance National

Content
5.1 The Workforce Skills Development Strategy and Plan
With support from the World Bank, Government engaged Mott MacDonald to
undertake a Capacity Needs Analysis for the Oil and gas sector.
The study assessed the capacity needs of the oil and gas sector in Uganda,
taking stock of the existing institutional and human capacity,
Formulated a Workforce Skills Development Strategy and Plan (WFSDSP) for
the sector.
The strategy and Plan will among others outline the actions required to support
the existing education and education institutions to deliver oil and gas ready
graduates with the required international standards to meet the demands of the
industry.

5.2 Establishment of the industrial Enhancement Centre;

In partnership with oil companies, the process of development the Centre has
commenced.

The Centre will nurture private enterprises to be able to supply in the oil and gas
sector. The Centre will also play the capacity building role for the local enterprises

5.3 Agriculture Development program for the Albertine region

Government in partnership will oil companies is to implement the ADP whose

overall objective is to support the Agricultural sector to enhance food supply for the
oil and gas industry.

The program will support activities across the entire value chain.

5.4 Establishment of Talent registrar of Ugandan companies eligible for

participation in the oil and gas sector and harmonization of standards of
the different oil companies in lines with the standards acceptable within
the co
5.5 Capacity Building

Government prioritised investment in capacity building

of its Officers.
Start of Uganda Petroleum Institute Kigumba for
artisans and technicians training
Undergraduate studies in Petroleum Geoscience at
Makerere University.

 Post graduate studies in Petroleum Geoscience at

Makerere

University commenced

in 2012/2013,

supported by the University of Bergen, Norway.

Private institutions are encouraged to introduce high
quality petroleum related programmes. 3 private
Universities now offer petroleum training & 3
petroleum institutions have been opened in the
country.
6.0 Opportunities for Ugandans
a) Employment

By the end of 2013, the sector

employed both directly and
indirectly over 10,000 people.

Employment

Numbers

Direct

1028

Indirect

2364

Induced

6784

Total

10,177

b) Goods and Services Provision

Implementation of the above measures has resulted into growth of value of the
IOCs spend on contracts with local service providers from 12% in 2010 to 28% in
2013.
Company

Percentage spent on
Local suppliers, 2013

Tullow

27.00

CNOOC

37.80

Total

26.00

Average

28.00

52% of Direct and 95% of Indirect and Induced are Ugandans

7.0 INVESTMENT OPPORTUNITIES

The Midstream and Downstream industries are characterized by
infrastructure projects with front-end studies and have high
potential for local participation in terms of employment and
entrepreneurship.
Other than employment, the following are some of the services for potential
local involvement:

Transportation
Environment consultancy
Construction/ Civil works
Maintenance and repairs
Heavy equipment and machinery
Catering

Banking & Insurance

Legal services
Health services

LOCAL CONTENT OPPORTUNITIES SUMMARY

In summary, the opportunities for Local Content that accrue
from the development of the midstream and downstream
segments of the petroleum industry can be categorized into:

Petroleum, Uganda.

Ensuring energy security and stimulation of a stable

macroeconomic environment for doing business that allows local
Small and Medium Enterprises (SMEs) to flourish.
Direct employment.
Participation in the provision of goods and services and in the
general supply chain.

8.0 CHALLENGES FOR LOCAL PARTICIPATION

According to a study on the opportunities for local content in
Ugandas oil and gas sector conducted in 2011, the following
challenges have been identified as bottle-necks to local
involvement in oil and gas projects in general:
Inadequate specialized skills relevant to the petroleum industry.
Inadequate competitiveness at international level for most of the
enterprises.
Low entrepreneurial skills.
Limited financial capacity.
Low level of technology.
Poor physical infrastructure.
High and stringent standards required by the industry which are
costly to meet.

9.0 WAY FORWARD

The limited activities in the operations in the industry pauses challenges

especially the decline in business which has affected the indigenous

enterprises.
This however is an opportunity for local enterprises to seek viable
partnership, build the required capacity and develop policy frameworks and
implementation which greatly will enhance the level and quality of National
content.

10. CONCLUSION
Ensuring optimum local content at
any stage of the oil and gas value
chain will depend on:
How local content is defined.
How s u i t a b l e the legislative a n d
regulatory
environment
is
structured.

 How the government promotes

local content without affecting
national competitiveness.
Defining a realistic target for local
participation and how it should be
measured.
Drawing on lessons from
other
countries.

Thank You