INTERVIEW WITH ERNEST RUBONDO, EXECUTIVE DIRECTOR OF THE PETROLEUM AUTHORITY OF UGANDA – UGANDA CHAMBER OF MINES AND PETROLEUM MAGASINE
- Overview of the Sector
As one of the ten fastest growing economies in Africa, the discovery of oil in Uganda strategically places the country as the potential regional hub for trade and investment.
The successful and efficient exploration efforts have resulted in the confirmation of 6.5 Billion barrels of Oil in Place; with 1.4 to 1.7 Billion barrels of recoverable reserves at an investment of less than US$4 Billion. This is an extremely low finding cost for oil, which is an achievement for the country.
With the issuance of nine production licenses, and the soon to be concluded licensing round, the oil and gas sector in Uganda is broadening from just exploration to new exploration, development of discovered fields and construction of a refinery and pipelines together with other attendant infrastructure. In the medium term, investment in the country’s oil and gas sector are estimated at US$ 20 billion; ($10 billion - field development & new exploration; $10billion - petroleum infrastructure development). This is important, given that Uganda’s GDP is US$ 27 billion, and therefore we must work hard to ensure that a significant portion of this investment is retained in the country.
Efforts to support this level of investment have included putting in place new regulatory, fiscal and institutional framework together with developing the required physical and security support infrastructure. This provides a well regulated, stable and predictable investment climate in the country, and specifically for the oil and gas sector.
- What is the role of the Petroleum Authority of Uganda?
The mandate of the PAU is to monitor and regulate the exploration, development and production, together with the refining, gas conversion, transportation and storage of petroleum in Uganda. This includes ensuring that petroleum operations in Uganda are carried out in accordance with the relevant laws, regulations, guidelines and in line with international best practice for the petroleum industry. The role of the Authority therefore, is to maintain a regulatory environment that is conducive for investment and attaining sustainable development of the oil and gas resources discovered in the country.
The specific functions of the Petroleum Authority of Uganda are described in Part III of the Petroleum Exploration, Development and Production Act 2013 and Part II of the Petroleum Refining, Conversion, Transmission and Midstream Storage) Act, 2013 together with Section 7.2.4 of the National Oil and Gas Policy.
- What will be some of the key priorities for the Authority during 2017/2018?
There is definitely an urgent need to recruit the initial staff under the different Directorates in the Authority and this is being done. This is important so as to enable training and orientation of these staff before the anticipated intensive activities during the peak of the development phase which is expected commence in the next one year or so.
The PAU will continue to take forward the monitoring and regulatory roles for the Upstream and Midstream petroleum sectors in the country. This will include;
- Monitoring petroleum exploration activities undertaken by the companies expected to be newly licensed in the country by the Ministry of Energy and Mineral Development in the next few months.
- Review and make recommendations on Field Development Plans (FDP’s) and Petroleum Reservoir Reports (PRR’s) for petroleum discoveries like Jobi-East, Mpyo and Lyec which are still under appraisal.
- Monitoring implementation of the development activities being undertaken by the licensed companies which received production licenses. These activities include Environment and Social Impact Assessments, Resettlement Action Planning, Front End Engineering Design, Enhanced Oil Recovery, Geotechnical and Engineering studies among others.
- Participate in meetings, negotiations and activities related to the Refinery project and Crude Oil Export Pipeline project.
- Prepare and publish the annual Petroleum Resources Report for 2017.
The Authority will also take forward the regulation of National content development in the country’s oil and gas sector including developing the National Suppliers’ Database and the National Talent/Skills Register and monitoring the implementation of national content in the respective activities and operations.
- Monitoring and Regulatory tools
The primary monitoring and regulatory tools for the oil and gas sector included the 2013 Upstream and Midstream Acts together with other laws on Environment, Land, Income tax, among others. To guide the implementation of the Petroleum Acts, seven sets of regulations were put in place during 2016 covering General, HSE and National Content for the Upstream and Midstream Acts together with Upstream Metering regulations. This is in addition to the Productions Sharing Agreements (PSAs) signed between Government and the licensed oil companies.
In addition to the above legal instruments, the practical tools include consultations and review of technical documents such as Field Development Plans; Petroleum Reservoir Reports, well proposals, drilling programs, seismic survey plans, geoscientific studies, among others.
Another import tool is the costs management framework as provided for in the PSAs. Annual work programmes and budgets are presented to the Advisory Committee comprised of representatives of Government and the Oil Companies for consideration and approval. Activities undertaken by the oil companies must be in line with these approvals and these activities are monitored by the Government. Other tools include Petroleum Resources Reporting to document and categorize the country’s petroleum resources, management of all acquired petroleum data which is submitted to Government by the licensees and regulation of National Participation through specific tools such as the National Suppliers’ database and the National Talent Register, among others.
- An overview of the National Suppliers’ Database for the oil and gas industry and its importance.
The National Suppliers’ Database (NSD) is one of the tools for regulating the procurement of goods and services in the petroleum subsector. The Upstream and Midstream National Content regulations, 2016 require the Authority to develop the NSD, which will enable communication and exchange of information between suppliers of goods and services, the licensed oil companies and the PAU.
The Authority has completed the design of the NSD and its implementation has commenced with registration of the potential suppliers for Uganda’s oil and gas sector. PAU has invited, through the media and different fora, potential suppliers to apply for qualification. Applications from suppliers from within and outside Uganda are currently being received and evaluated. The successful applicants will be shortlisted and published on the register.
The NSD will ensure that Government is aware of the experience and capabilities of the qualified Ugandan and foreign companies in petroleum subsector. This will enhance transparency in the procurement process and also ensure provide a one stop database for procurement for Licensed oil companies and thus shortening the procurement process. This is also expected to reduce the costs associated with contracting and, provide a standardized approval process in line with the laws and regulations.
- Outlook for the future
Government will continue working with the private sector and other stakeholders to fast track the development the critical infrastructure including pipelines, central processing facilities, the refinery, storage hubs, an international airport, roads, among others to enable the country achieve first oil. It is also important to appreciate the potential of the petroleum sector to contribute the growth of other productive sectors of the economy such as agriculture, tourism, industry and manufacturing, among others. These, and other developments also point to the fact that Uganda has an opportunity to become the regional hub for petroleum related services such as logistics. We will therefore continue to ensure that the regulatory environment supports investment, and achievement of sustainable development of Uganda’s oil and gas resources.