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Uganda: Companies Urged to Seek Partnerships in Oil Sector

Ugandan suppliers looking at providing goods and services to the oil and gas sector need to build partnerships with their local, regional, and international counterparts if they are to fully participate in the multi-million dollar opportunities expected to flow in the coming months.

Experiences in the oil and gas development in various parts of the world indicate that strong partnerships are important when investing in the oil and gas sector.

In different parts of the world, investors in the oil and gas sector are using partnerships to respond to challenges of meeting demand and contribute to sustainable development.

Experts say oil and gas undertakings are joint ventures with the property owners and fiscal authorities and in many cases, the national oil company.

In the oil and gas sector, firms partner because each company brings a different combination of capital and risk-bearing capacity, capabilities, complementary physical assets, and legitimacy for access.

During the 7th annual oil and gas convention held virtually last week under the theme; ‘Harnessing opportunities in the oil and gas sector- Post FID’, Dr Elly Karuhanga, the chairman of Uganda Chamber of Mines and Petroleum (UCMP), said the provision of local content policy in the oil and gas sector offers investment opportunities to members in the private sector but they need to form partnerships to be more effective.

“My advice to the local companies is to form partnerships to be effective in providing services in Uganda’s oil and gas industry,” he said.

Dr Karuhanga added that local companies who intend to provide services in the oil and gas sector should also think about offering subcontracts to other firms and all this can be achieved through forming partnerships.

Other experts said searching for and producing oil and gas is a complex task and it doesn’t only require a lot of technical know-how, but also a great deal of investment and a certain willingness to take risks. All this they say can be achieved through joint ventures.

In the same meeting, the Minister of Energy and Mineral Development, Ms Ruth Nankabirwa called upon all companies involved in the oil and gas sector to meet the time frame of the projects they are undertaking in the sector.

She said the investment opportunities in the oil and gas sector are enormous, especially during the Final Investment Decision (FID) and local companies should not make any delays during their service provision.

“In the oil and gas sector regulations, there are laws, regulations or policies which need to be amended to promote investment ,” she said.

“I will put my energy into making sure that we meet and beat the timeframes regarding the execution of duties in the oil and gas sector. I will have an open door policy in my office for people in the sector,” she added.

Oil discovery

Since the discovery of commercial oil deposits in Uganda in 2006, the government has undertaken several initiatives to ensure direct and indirect participation of citizens and enterprises in the oil and gas sector to contribute to achieving lasting benefits for the country.

The oil and gas sector is guided by the National Oil and Gas Policy 2008 to sustainably explore and develop the country’s oil and gas resources.

The Ministry of Energy and Mineral Development through the Directorate of Petroleum is responsible for formulation and review of policy, legal and regulatory frameworks; continued promotion, exploration, licensing, and sustainable exploitation and utilisation of the country’s oil and gas resources.

Other responsibilities include reliable and affordable supply of quality petroleum products for all sectors of the economy at internationally competitive and fair prices within the appropriate health, safety and environmental standards acquires petroleum data to guide licensing and promotion of the Country’s oil and gas potential; develop and manages midstream petroleum infrastructure and regulates the downstream petroleum activities.

To ensure maximum benefits accruing from the oil and gas sector, the government has put in place the Local Content Policy, therefore, seeks to enhance the opportunities, address challenges and constraints, describe the necessary institutional framework to coordinate the development, implementation, and monitoring of local content, and provide the necessary monitoring and evaluation framework.

OIL DISCOVERY

The long journey to investment stage spanning over 16 years from the time oil was first discovered in 2006 is not surprising. As a nascent country finding oil for the first time, Uganda started from scratch putting together the necessary legislative and contractual framework to facilitate the fair allocation of the resource wealth to both the international oil companies, the government as well as the development of the requisite infrastructure.