Tullow Oil Under Pressure to Build Refinery in Uganda

Tullow Oil Under Pressure to Build Refinery in Uganda

01-04-2008 (African Oil Journal)

Tullow Oil is coming under pressure to build a new oil refinery in Uganda.

Tulllow was last month reported to have been assessing the quality of the oil so far discovered before a decision is made on whether to build a refinery which could cost anything from €200m to €2bn.

At the moment, the Uganda government and Tullow Oil have an agreement to build a mini-refinery in an early production scheme that will enable installation of a 100MW heavy fuel oil thermal power plant.

In a statement issued yesterday, Ugandan President Yoweri Museveni said Tullow plans to build a refinery and a power plant in Uganda when it begins producing in the east African nation next year.

He said the company will build a refinery to produce diesel, kerosene and heavy fuel oils and establish a 50 megawatt to 85 megawatt power plant, Museveni said. The plants will be built at Hoima in western Uganda, he added.

Uganda produces 145 megawatts of power at its two hydropower plants, against an installed capacity of 380 megawatts, and generates 100 megawatts of thermal power.

The power produced by Tullow will be added to the national grid.

Tullow will pump about 4,000 barrels of oil a day when production begins, the Ugandan president said.

"We are trying to understand how much oil there is, the type of oil and what we will do with it. All those factors will play a decisive role in Tullow investing in a refinery," Paul McDade, Tullow's chief operations officer said recently.

Mr McDade also said that Tullow is considering the possibility of extending the proposed Eldoret-Kampala pipeline to Lake Albert, where the oil has been discovered. Such a move would depend on the size of recoverable reserves at the site.

Uganda's energy and mineral development minister Daudi Migereko said plans to re-design the pipeline as well as expand its capacity are being considered.