Through Bwambale , Musede and Co. Advocates, Mulumba states that 50% of the stake Tullow Bought from Heritage Oil was had already reverted to the government. Mulumba wants a declaration that Kingfisher discovery ceased to form part of the petroleum exploration area for Heritage and Tullow when Heritage failed to ask for a production license for block 3A after the exploration lincense had expired beyond the renewable eight years provided by the law.

Mulumba wants court to restrain the Attorney General, Heritage Oil and Gas Limited and Tullow Oil Uganda from “undertaking any further dealings including but not limited to exploration, production, selling, assigning, transferring any interest in exploration Area 3A (EA-3A) kingfisher (Kajubirizi) of the Albertine Graben.” Tullow which co-owns 3A with Heritage bought the later interests at 1.5billion US dollars in 2010. The company which now owns almost 100% of all the oil wells so far identified is planning to farm out 33% of its stake of France’s Total and another 33% to China’s CNOOC. The government is yet but expected to approve the sale by end of January 2012.

Here is a summary of the key issues of concern

1. The government is not ready to undertake oil production (more preparation and laws needed)
2. All Heritage Oil and gas assets sold to Tullow were null and void as the former’s license on Block #A (Kingfisher exploration had ended) and as per 19 (1) (b) of the Act they reverted the government.
3. The Memorandum of understanding signed between Tullow and Uganda government to normalize the license issue is null and void as it is inconsistent with the Petroleum Exploration and Production Act 1993
4. Licenses for the oil blocks should be made in accordance with the Public Procurement and Disposal of Public Assets Authority Act (open bidding).
5. The Court cases between Tullow oil and Heritage Oil and gas, as well as between the Uganda Revenue Authority (on behalf of the Uganda Government) and Heritage Oil and Gas –are warning signs of how uncertain it is that Ugandans will benefit from the oil sector.
6. The recent corruption allegations that top ministers have received hefty bribes from oil companies to give the companies favourble deals have further increased worries on the running of the oil sector and increased concerns that Ugandans might not benefit from the oil resource.
7. The increasing insistence by the government to keep oil production sharing agreements secret raises issues at what the government is hiding, how much has been given away and whether oil companies and not taking advantage of the country.
8. The confidentiality (secrecy) clauses in the Production sharing agreements no longer apply since the license with the companies with which the agreements were signed have since expired. According to section 59 of the Production Sharing agreement, the confidentiality clauses cease to exist when the license ceases to exist. It is for this very reason Ultimate media decided to publish the oil agreements.

Here is a Detailed review article on the case and especially its implication for Tullow Oil

Also see our other Uganda oil related articles

Uganda government production sharing agreements with oil companies

Uganda government approves Tullow oil takeover of Heritage assets

Ugandans ponder oil benefits

Fosterwheeler final report on Uganda oil industry refinery

Parliament pins Bank of Uganda Governor for spending first oil money on buying fighter jets

Government of Uganda outlines oil production program

Parliament calls for censure of key ministers Sam Kutesa, Amama Mbabazi and Hillary Onek over oil bribery allegation

Uganda urged to invest oil revenues in income generating activities

Uganda buoyant over oil prospects as Museveni outlines key strategy

Government asked to solve land purchase conflicts in oil producing areas

Ultimate Media

The post Key issues of contention in Uganda’s oil sector reflected in case against Tullow and Government first appeared on Uganda Multimedia News & Information.

Download a PDF of the Foster wheeler Uganda Refinery study report here. 

The government of Uganda hired Swiss Engineering and Construction company Foster Wheeler Energy Limited (FWEL) in early 2011 to undertake a study of Uganda’s oil potential. The key goal of the assignment was to advise the government on whether to strategise on constructing a refinery or an oil pipeline to export crude oil.

According to the Ministry of Energy and Mineral Development, the study was is in line with the objective four of the National Oil and Gas Policy for Uganda of promoting valuable utilisation of the country’s resources.

The aim of the study, among other things, was to recommend the optimum size, configuration, location, cost and financing options of the refinery, the attendant infrastructure and market for the refined products, as well as preliminary environmental assessment of the possible impacts of refinery development.

Foster Wheeler successfully completed the study and presented a report to the Ministry of Energy and Mineral Development in August 2010.

It is by now no secret that the study recommended that it would be more viable for Uganda to build an oil refinery, with a 150 000-bl/d refinery facility in Uganda suggested.

The study followed pressure from many oil companies preferring Uganda to use the Kenyan refinery in Mombasa to process the oil from western Uganda.

Other than the technical benefits of avoiding transporting heated crude over such a long distance from western Uganda to Mombasa, the consultants pointed at the direct employment opportunities that will accrue from the refinery, saying it will boost Uganda’s economy by saving over $1bn annually.

The study report weighing the different options as well as the investment opportunities in either options is the key document on Uganda’s oil industry. No wonder the government is selling a copy of the report at more than $150,000 and you have to sign an agreement not to divulge the contents there in.

We bought a copy from a 3^rd party and are availing it to you so you can take more informed decision as regards Uganda oil sector and potential.

Download a PDF of the Foster wheeler Uganda Refinery study report here. 

You can also download

Uganda oil and Gas Laws-a Review

Uganda Production Sharing Agreement with oil companies-part I

Uganda Production Sharing Agreement with oil companies-part 2

The post Fosterwheeler Final report on Uganda oil Industry Refinery first appeared on Uganda Multimedia News & Information.

This was revealed by NEMA environment inspector Isaac Ntujju while addressing journalists in Kampala.

Ntujju said that oil spills has been the challenge in the oil producing countries and therefore Uganda has to be prepared in advance to avoid what is taking place in other countries.

He says that the plan is already being developed by experts and very soon before Uganda starts producing it will be in place.

He however noted with concern the need to update and develop environment legislations concerning the sector saying that the ones in place were developed without putting oil discoveries in place.

By Isaac Senabulya

The post Government prepared for possibility of oil spills first appeared on Uganda Multimedia News & Information.

Mafabi who president Museveni’s advisor in charge of the media issues John Nagenda recently termed as an improvement of FDC leader, Col. Kiiza Besigye has today told the executive to get prepared for a “showdown” over reported government attempts to shield corruption in the oil sector.

Mafabi has informed our spies at Parliament today that president Museveni’s plans to shield his ministers who reportedly received bribes in order to grant licences to Tullow Oil Company will not work out as the head of state expects.

Last week reports emerged that President Museveni had requested the MPs on the government ticket to save the ministers involved in the oil saga. The ministers believed to have received bribes to pass oil deals are Hilary Oneke, Sam Kutesa and Amama Mbabazi.

Ultimate Media

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bank of Uganda Governor, Emmanuel Tumusiime Mutebile

Mutebile had appeared before the committee chaired by Micheal Werikhe to answer questions related to oil revenue and how the oil money was kept in shillings yet it came in dollars.

Mutebile had told the mps on the committee that in a meeting he had with the president and the ministry of finance, he was directed to release funds from the consolidated fund to purchase fighter jets in 2010 on ground that the money will be recovered to the consolidated fund from the capital gain tax of oil companies.

However, the Governor angered the MPs on the committee when he totally rejected to give the committee evidence  indicating president’s  directive to governor to release jet money from the consolidated fund with out parliament approval.

The member of parliament for Makindye west Hussein Kyanjo had wanted  the evidence from governor that shows that the president directed him to draw money from consolidated fund which the governor declined to do and the committee ordered him to leave .

The committee chairperson Micheal Werikhe told the governor to go if he cannot give evidence to the matter he rose before committee because this information is vital in the committee’s investigation into oil sector.

The member of parliament for Buhanguzi county in Hoima District Julius  Junjula Bigiirwa  was furious with the governor’s failure to give them the alleged president Museveni ‘s  directive to use the consolidated money to buy jets and he said how sure are they that the oil money in bank of Uganda will not be mismanaged .

By Isaac Senabulya

The post Parliament chases Mutebile over spending oil money on jets first appeared on Uganda Multimedia News & Information.

Acholi cultural leader Rwot David Onen Achana

This follows the confirmation of some oil wells in Amuru district last year.

This came after oil was discovered in Amuru district and oil companies started working on this oil field almost a year now.

The former Chairperson of the Acholi Parliamentary Group, Livingstone Akello Okello says the government should recognize and grant the interests of the Acholi in the oil that Uganda is set to start producing.

Recently the Acholi Paramount Chief (Rwot), David Onen Achana II, also asked his subjects to form groups so that they can demand oil royalties from the exploration company in the region.

Uganda is expected to start oil production in two years after commercially viable oil deposits were confirmed in the mid western parts of the country.

Ultimate Media

The post Acholi leaders ask for oil royalties from oil companies first appeared on Uganda Multimedia News & Information.

The Permanent Secretary in the Ministry of Energy and Mineral Development, Kabagambe Kalisa says that oil production has not started and will commence in 12-18months from 2012.

While appearing before the adhoc parliamentary committee on oil Tuesday morning, Kalisa said the government and oil companies are currently carrying out a testing program intended to understand how the oil will be produced.

He explained that while some oil has been extracted, it is being stored for testing and will sold later to cement factories and power generation firms.

The PS says the supply of crude oil to the companies will be the second phase in about a year and half, before the government embarks on the 3^rd phase of oil production with construction of a refinery being planned to start in three years.

He says the government is planning to start with a small refinery to produce about 200000 barrels of oil per day for the local market as the oil companies and government to develop capacity.

Kalisa says within 5years, the oil refinery will be able to produce 60000 barrels of oil per day which will be targeted at the regional market.

This, he said will be expanded to a production capacity of 12, 0000 barrels of oil per day in ten years when the country should start exporting oil on the global market.

Ultimate Media

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Sam Kutesa, Uganda's Foreign Affairs Minister

The MPs who begun their special sitting to discuss the dealings in the oil sector on Monday were breating fire threatening to censure the three ministers after strong allegations were tabled that the three ministers have received bribes to facilitate unfair deals with oil companies, and that they are behind influence peddling in the oil sector.

The Youth MP for Western Uganda, Gerald Karuhanga moved a motion calling for a commission of inquiry into the dealings of senior ministers in the oil sector which was widely supported. Karuhanga presented documents which he claimed were accessed from US government dossiers indicate senior ministers received bribes to give oil companies better terms on oil agreements.

Karuganga presented documents alleging that:

• Kutesa Kahamba Sam through his company East African Development company Kenya received 17m Euros (close to 74 billion Uganda shillings)through his bank called EFK in Zurich. That the money was leaving a Tullow account 40037242019 in a bank in Malta…through a recipient bank in UAE Dubai
  • That On June 21, from Tullow on account 4003724191 from the same back to Dubai the Hon Hillary Onek (shows bank statements) received 500,000 Euros.
  • That July 6, Hillary Onek received another 500,000 Euros on his account 0034450627007 in a Dubai bank
  • Hillary Onek also received another 500,000 Euros on July 17, 2010 same bank same account
  • That Hillary Onek received 1.5mEuros on the same account same day.

Sam Kutesa however insisted the alelgations are false and documents presented were forged.

The MPs concerned stemmed from the consistent refusal by the government to publicly avail oil sharing agreements will oil prospecting and production companies.

Ultimate Media

The post Parliament calls for censure of Amama Mbabazi, Hillary Onek and Sam Kutesa first appeared on Uganda Multimedia News & Information.

Addressing press conference today in Kampala, the attorney general, Peter Nyombi advised MPs to follow the correct procedures if they need to take a detailed look at the oil pacts between the government and exploration companies, Tullow and Heritage oil.

Nyombi also advises the public to go slow on the oil deal since the matter is before court but also reveals that local lawyers can not be allowed to execute their duties in international court which prompted the government to hire an international law firms to work together with the local based legal team in the case filed against the government by heritage oil.

But the energy minister, Irene Muloni insists that the pacts were presented before the 8^th parliament and that parliament has copies of the agreements. She says at the appropriate time, the public will get to know what’s contained in the agreements of the oil resource they are about to benefit from.

Meanwhile, URA boss, Allen Kagina confirms that that the government will accrue a 30% of revenue (USD 1.45Bn) in the capital gains dispute case resulting from Heritage Oil sale of its assets to Tullow Oil Uganda.

She says the government has budgeted 11.9 billion shillings for senior international lawyers who will argue Uganda’s case, with each lawyer set to earn 747 US dollars per hour.

The post Government not ready to disclose oil sharing agreements first appeared on Uganda Multimedia News & Information.

They say crops were uprooted in January this year during the exploration of Kasenene oil well in Bulisa Town council and people were promised compensation.

Bulisa district has major oil exploration cites like Kasenene, Kigogole I, III among other by Tullow oil company.

Tullow oIl Uganda Corporate Affairs manager Jimmy Kiberu admits to delays in compensating the residents but attributes it to delayed approval of the compensation rates by government.

He called for patience saying that all the eligible complainant and residents would be cleared accordingly as soon as the compensation rates are approved by the government.

According to Kiberu the company has over 23000 damaged assets to compensate in Bulisa district alone. On Tuesday religious leaders from Bulisa issued a joint communication calling for just compensation.
Ultimate Media

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