Russian consortium now wants Uganda’s refinery project downsized

Weeks after pulling out as the preffered lead bidder for the 60,000 barrel refinery to be located in Hoima Uganda the Russian consortium RT Global resources is now demanding that the country builds a small refinery in the first phase with a capacity of between 7000 and 8000 barrels a day.

According to the local Daily Monitor newspaper which interviewed Russia’s ambassador to Uganda Alexander Dmitrievich Polyakov, the envoy said the conceptualized 60,000 barrels a day refinery would be expensive considering the high technology required pointing to a  flaw in designing which would ultimately lead to mistakes in building and operating the new oil refinery.

Alexander notes that should the new proposal be adopted the new refinery could be completed in a short period of seven to eight months and refine imported crude as production in Uganda is yet to commence.

He also noted challenges in crude oil production volumes in the set timelines and challenges in the needed crude to reach the required operational levels of refinery as well delays in completion of the pipeline.

“There is a danger that the refinery (60,000 barrels per day) would be constructed by the year 2020, but due to unforeseen reasons, production of crude oil in Uganda may not reach the necessary levels for normal operation of refinery. The issue of oil pipeline (from Hoima to Indian Ocean coastline) is also still bad. However, it is not up to us, the Uganda government has to decide; we just advise. Nevertheless, we’re ready to propose a more productive solution to the oil refinery,” Alexander is quoted saying.

“However, it is not up to us, the Uganda government has to decide; we just advise. Nevertheless, we’re ready to propose a more productive solution to the oil refinery,” he concudes.

The refinery project is the child of the National Oil and Gas Policy (2008) for Uganda (objective 4) which seeks to promote valuable utilisation of the country’s oil and gas resources through in-country refining of crude oil.

It was Foster Wheeler Energy Limited Ltd from the United Kingdom back in 2010 after being contracted to conduct a feasibility study on building a refinery in Uganda that recommended that the development of 60,000 barrels per day refinery was commercially viable with a Net Present Value (NPV) of US$ 3.2 billion.

Under the current plan the development of a refinery in a modular manner, was to see the first phase in place by 2018.

There have been fears of major delays after the alternate bidder SK Engineering and Construction backed out of the project following the exit of the preferred lead investor Russia’s RT Global Resources in July.