Today, Uganda closes the long-awaited Final Investment Decision (FID) with international oil companies Total E&P and CNOOC. The decision, according to experts, will unlock billions of dollars of investment in Uganda’s oil and gas sector. Total chief executive Patrick Pouyanné, is in the country to sign the deal together with the Chief Executives of Uganda National Oil Company and Chinese oil company CNOOC. The FID is in respect to Tilenga and King Fisher Development Petroleum Authority (KFDA) joint venture partnership which comprises Total (56.7%), CNOOC(28.3%) and UNOC(15%) Ugandan President Yoweri Museveni and his Tanzanian counterpart, Samia Suluhu Hassan,are expected to witness the event at Kololo Independence Grounds.
MediaScapeNews (MS) has caught up with Mr Peter Muliisa, the Chief Legal and Corporate Affairs Officer to break down the meaning of today’s activities!
MS: What is this whole FID about?
Muliisa: FID is ‘Final Investment Decision.’ This means that all partners in Tilenga and Kingfisher development areas have authorised spending of the money required to construct the projects through development to production. It means they can now award contracts to the companies that are going to do the construction and other services. It also means that shareholders of East African Crude Oil Pipeline (EAPCO) have authorised spending of the money required to have the project constructed. This is why President Museveni of Uganda and President Suluhu of Tanzania are witnessing the event. The event at Kololo will basically set off the construction stage of the three key projects to get Uganda’s oil out of the ground by 2025. Shareholders of EACOP are: UNOC(15%), Total(62%), CNOOC(8%) and TPDC(15%).
MS: How much is this FID worth?
Muliisa: It is worth $15 billion. Roughly 60 Trillion shillings coming into our economy. This investment is the first of its kind in the history of our country!
MS: What does this amount money mean for someone in Kawempe of Buvuma Islands?
Muliisa: This means opportunities worth 15 billion USD and he/she can tap in through employment opportunities, provision of services and goods to the industry as well as other induced opportunities. It also means that the economy will grow and advantage the citizens in many ways. An investment of USD 15 billion within a period of 4 years will definitely have an impact on micro and macro economics of a country like Uganda. It will be the single biggest investment in Uganda’s history which will help grow our tax base that will definitely have impact on health care, infrastructure etc. Government of Uganda will also get another revenue stream in addition to taxes(oil revenues) that it can deploy to infrastructure development.
MS: You just talked of 2025. We have seen such dates for FIRST OIL before. How sure are we this is not just another one?
Muliisa: This is solid. The construction contracts have timelines that will have to be met. So yes, we are certain first oil will be here 2025. Previously, we set these dates but never really achieved FID and award of construction and other contracts. Now we have awarded these contracts and construction has commenced in earnest. First oil is a product of construction, drilling and other services and we can technically time when it is produced from when construction and other contracts commence. So we are absolutely sure now!
MS: Talking about local benefit, what is our local content readiness?
Muliisa: In Uganda, alot of effort has been put in place for ensuring readiness. I believe many companies and individuals are ready. Many more could be and hopefully they will be as we proceed. Many persons have also been educated in oil and gas disciplines and are ready to work for the sector. And Ofcourse, many skills don’t need specialised oil and gas sector training to be able to work.
MS: What about foreign content capacity?
Muliisa: Foreigners are definitely ready because the industry is global and mature.
MS: What exactly is going to be happening at Kololo today and what are the expectations from the parties involved?
Muliisa: Today(1st Feb), in Kololo, the two Presidents will oversee the launch of construction of the three projects and witness the award of level 1 agreements by the investors and shareholders in the projects to entities that will on their behalf conduct the construction activities. What will be signed are contracts of entities that are going to be employed by the Joint Venture Partnership (JVP) and shareholders to construct the projects. Obligations are for those companies to construct the projects and for the JVP and shareholders to pay them for the service.
MS: What should Ugandans do after this event?
Muliisa: Ugandans should wake up and make sure that they find footing in the opportunities created. Either as suppliers, employees but definitely as part of the value chain in every way possible. The channels have been created. This is a once in a lifetime opportunity.