GOVERNMENT'S VISION FOR LOCAL PARTICIPATION IN THE OIL SECTOR.

Presented By:
Betty Namubiru | National Content & Capacity Building Officer
Petroleum Exploration and Production Department

at

THE 2
ND
ANNUAL LOCAL CONTENT CONFERENCE
THURSDAY July 10
th
2013


1
MINISTRY OF ENERGY AND MINERAL DEVELOPMENT
MÌNÌSTRYOF ENERGYAND
MÌNERAL DEVELOPMENT
THE REPUBLIC OF UGANDA
MINISTRYOF ENERGYAND
MINERAL DEVELOPMENT
THEREPUBLICOF UGANDA
MÌNÌSTRYOF ENERGYAND
MÌNERAL DEVELOPMENT
THE REPUBLIC OF UGANDA
MINISTRYOF ENERGYAND
MINERAL DEVELOPMENT
THEREPUBLICOF UGANDA
P e t r o l e u m E x p l o r a t i o n a n d P r o d u c t i o n D e p a r t me n t
PRESENTATION OUTLINE
1. INTRODUCTION
2. LEGAL AND REGULATORY FRAMEWORK
3. NATIONAL OIL AND GAS POLICY FOR UGANDA
4. GOVERNMENT’S VISION
5. OPPORTUNITIES AND BENEFITS
6. CONCLUDING REMARKS

2
MÌNÌSTRYOF ENERGYAND
MÌNERAL DEVELOPMENT
THE REPUBLIC OF UGANDA
MINISTRYOF ENERGYAND
MINERAL DEVELOPMENT
THEREPUBLICOF UGANDA
P e t r o l e u m E x p l o r a t i o n a n d P r o d u c t i o n D e p a r t me n t
STATUS OF THE OIL AND GAS SECTOR (1)
3
• The Albertine Graben is subdivided into
17 Licence Areas
• Four (4) Active Production Sharing
Agreements (PSAs)
• 3 License Operators (Tullow, Total,
CNOOC)
• Next round of licensing to be undertaken
through competitive bidding
• Licensees in the country changing from
small to major oil companies.
ACREAGE/LICENCES
MÌNÌSTRYOF ENERGYAND
MÌNERAL DEVELOPMENT
THE REPUBLIC OF UGANDA
MINISTRYOF ENERGYAND
MINERAL DEVELOPMENT
THEREPUBLICOF UGANDA
P e t r o l e u m E x p l o r a t i o n a n d P r o d u c t i o n D e p a r t me n t
STATUS OF THE OIL AND GAS SECTOR (2)
4
DATA ACQUIRED
WELLS DRILLED; 90 Exploration and Appraisal
Wells; 79 successful (87% success rate)
Drilling success trend (Source : PEPD)
JOBI DISCOVERY
• JOBI-1
• JOBI-2
• JOBI-2A
• JOBI-3
RII DISCOVERY
• RII-1
NGIRI DISCOVERY
• NGIRI-1
• NGIRI-2
• NGIRI-3
MPYO DISCOVERY
• MPYO-1
• MPYO-3
GUNYA DISCOVERY
• GUNYA-1
NGEGE DISCOVERY
• NGEGE-1
• NGEGE-2 & 2A
• NGEGE-3
• NGEGE-4
• NGEGE-5
• NGEGE-6
NGARA DISCOVERY
• NGARA-1
KIGOGOLE DISCOVERY
• KIGOGOLE-1
• KIGOGOLE-2
• KIGOGOLE-3
• KIGOGOLE-4
• KIGOGOLE-5
• KIGOGOLE-6&6A
TAITAI DISCOVERY
• TAITAI-1
• TAITAI-1A
KASAMENE &WAHRINDHI
DISCOVERIES
• WAHRINDI-1
• KASAMENE-1
• KASAMENE-2
• KASAMENE-3&3A
NSOGA DISCOVERY
• NSOGA-1
• NSOGA-2&2A
• NSOGA-5
KARUKA DISCOVERY
• KARUKA-1
• KARUKA-2
NGASSA DISCOVERY
• NGASSA-1
• NGASSA-2
WARAGA DISCOVERY
• WARAGA-1
MPUTA DISCOVERY
• MPUTA-1
• MPUTA-2
• MPUTA-3
• MPUTA-4
• MPUTA5
NZIZI DISCOVERY
• NZIZI-1
• NZIZI-2
• NZIZI-3
KINGFISHER DISCOVERY
• KINGFISHER-1&1A
• KINGFISHER-2
• KINGFISHER-3&3A
TURACO DISCOVERY
• TURACO-1
• TURACO-2
• TURACO-3
NGAJI-1
MVULE-1
ITI-1
AVIVI-1
AWAKA-1
KANWYATABA-1
1 1 1 1
5 5
13
9
10
8
22
3
3
2
0
1
2
3
4
5
6
7
8
0
5
10
15
20
25
30
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
P
r
o
j
e

N
u
m
b
e
r

o
f

W
e
l
l
s

YEAR
DRILLING SUCCESS TREND IN THE ALBERTINE
GRABEN
Discovery
88%
112%
DRILLING SUCCESS RATE
Success
MÌNÌSTRYOF ENERGYAND
MÌNERAL DEVELOPMENT
THE REPUBLIC OF UGANDA
MINISTRYOF ENERGYAND
MINERAL DEVELOPMENT
THEREPUBLICOF UGANDA
P e t r o l e u m E x p l o r a t i o n a n d P r o d u c t i o n D e p a r t me n t
STATUS OF THE OIL AND GAS SECTOR (3)
 21 oil and/or gas
discoveries made to date.
 Over 3.5 billion barrels of
STOIIP established.
 Estimated 1.2 billion
barrels of recoverable oil
equivalent.
 Appraisal of the
discoveries is ongoing.
 Less than 40% of the
Albertine Graben has been
evaluated.
5
DISCOVERIES AND RESOURCES
Discoveries in the Albertine Graben (Modified from Rubondo
MÌNÌSTRYOF ENERGYAND
MÌNERAL DEVELOPMENT
THE REPUBLIC OF UGANDA
MINISTRYOF ENERGYAND
MINERAL DEVELOPMENT
THEREPUBLICOF UGANDA
P e t r o l e u m E x p l o r a t i o n a n d P r o d u c t i o n D e p a r t me n t
INVESTMENTS IN THE SECTOR(1)
6
INVESTMENTS MADE
1
st
Major Discovery
MÌNÌSTRYOF ENERGYAND
MÌNERAL DEVELOPMENT
THE REPUBLIC OF UGANDA
MINISTRYOF ENERGYAND
MINERAL DEVELOPMENT
THEREPUBLICOF UGANDA
P e t r o l e u m E x p l o r a t i o n a n d P r o d u c t i o n D e p a r t me n t
INVESTMENTS IN THE SECTOR (2)
7
INVESTMENTS MADE
 Industry is capital intensive and high risk
 So far, risk capital invested in seismic surveys, exploratory and appraisal drilling
to a total of US$1.7 billion
 Sharp increase in investment after first discovery
 This is significant investment and will rise to many fold with further investments
expected in field development, production of the crude oil, processing and
transportation facilities
 The costs incurred in the sector in the country so far are classified as “Finding
Costs”
 Means the costs of finding commercial reserves of oil in USD per barrel
 On the global scale, the finding costs range between $5 - $25 per barrel



8
National Content (1)
DEFINITION OF NATIONAL CONTENT
Value Addition
 In Uganda, by Ugandans,
by the use of Ugandan materials,
services produced by Ugandans
& the use of facilities in Uganda.

 Participation of Ugandans
and Ugandan Firms in the
supply of works, goods and
services to the Sector.
MÌNÌSTRYOF ENERGYAND
MÌNERAL DEVELOPMENT
THE REPUBLIC OF UGANDA
MINISTRYOF ENERGYAND
MINERAL DEVELOPMENT
THEREPUBLICOF UGANDA
P e t r o l e u m E x p l o r a t i o n a n d P r o d u c t i o n D e p a r t me n t
National Content (2)
9
NATIONAL CONTENT Vs. LOCAL CONTENT

Local (community) content refers to contracts and
employment provided to the communities which are hosts
or immediate neighbours to the petroleum activities.

To meet a National content requirement; contracts or
employment shall be provided to an individual or company
from any part of the country.

Where capacity exists, consideration is given to local
content e.g. agricultural products, casual labour etc
MÌNÌSTRYOF ENERGYAND
MÌNERAL DEVELOPMENT
THE REPUBLIC OF UGANDA
MINISTRYOF ENERGYAND
MINERAL DEVELOPMENT
THEREPUBLICOF UGANDA
P e t r o l e u m E x p l o r a t i o n a n d P r o d u c t i o n D e p a r t me n t
LEGAL AND REGULATORY FRAMEWORK
Uganda’s Petroleum Exploration and Production is Governed by:

• The Petroleum (Exploration, Development and Production) Act 2013

• The Petroleum Regulations (1993)

• Model Production Sharing Agreements (PSAs)

• Environment, Wildlife, Water , Income Tax, Land, Statutes and Guidelines

• The National Oil and Gas Policy for Uganda, 2008

10
MÌNÌSTRYOF ENERGYAND
MÌNERAL DEVELOPMENT
THE REPUBLIC OF UGANDA
MINISTRYOF ENERGYAND
MINERAL DEVELOPMENT
THEREPUBLICOF UGANDA
P e t r o l e u m E x p l o r a t i o n a n d P r o d u c t i o n D e p a r t me n t
NATIONAL OIL AND GAS POLICY

Policy Goal:
“To use the country’s oil and gas resources to contribute to early
achievement of poverty eradication and create lasting value to
society.”

 Policy has ten objectives, each with strategies and actions.


 Policy available in print and website;www.petroleum.go.ug

 An abridged and translated version of the policy is being
developed.


11
MÌNÌSTRYOF ENERGYAND
MÌNERAL DEVELOPMENT
THE REPUBLIC OF UGANDA
MINISTRYOF ENERGYAND
MINERAL DEVELOPMENT
THEREPUBLICOF UGANDA
P e t r o l e u m E x p l o r a t i o n a n d P r o d u c t i o n D e p a r t me n t
STATUS OF POLICY IMPLEMENTATION (1)
Optimum National Participation – Objective 7
 Experience in the Industry has established that benefits form the sector are
achieved through active participation of Local firms and individuals
 Concluded a study on the opportunities and challenges for Ugandans’
participation in the oil and gas sector in September 2011 and recommendations
are under implementation.

 Copy of the study is on www.petroleum.go.ug

 Oil companies are being compelled to employ Ugandans and give business
opportunities to Ugandan companies.

 Various Ugandan companies are providing services to the industry; Environment
Consultancy, Civil Works and Construction, Transportation and Heavy lifting

 Several aspects of local content have been included in the new petroleum
legislation.

12
MÌNÌSTRYOF ENERGYAND
MÌNERAL DEVELOPMENT
THE REPUBLIC OF UGANDA
MINISTRYOF ENERGYAND
MINERAL DEVELOPMENT
THEREPUBLICOF UGANDA
P e t r o l e u m E x p l o r a t i o n a n d P r o d u c t i o n D e p a r t me n t
STATUS OF POLICY IMPLEMENTATION (2)
 Skills requirement study for the oil and gas in the country to be undertaken.
 Commencement of Uganda Petroleum Institute Kigumba artisans and technicians.

13
 Private institutions are introducing petroleum related courses.
 Increased training of Ugandans in oil and gas professions abroad for both public and
private players
Development and Maintenance of National Skills and Expertise - Objective 8
 First intake of 28 students completed during 2012 and
undertook industrial training in Trinidad and Tobago.
 Second intake of 60 students commenced studies in 2011.

 Undergraduate and post graduate studies in
Petroleum Geoscience at Makerere University.
 The third intake of 80 students commenced studies in
2012/13
 Second intake of 46 and first intake of 50 students
commenced studies in 2011/12 and 2010/11 respectively
MÌNÌSTRYOF ENERGYAND
MÌNERAL DEVELOPMENT
THE REPUBLIC OF UGANDA
MINISTRYOF ENERGYAND
MINERAL DEVELOPMENT
THEREPUBLICOF UGANDA
P e t r o l e u m E x p l o r a t i o n a n d P r o d u c t i o n D e p a r t me n t
STRATEGIES TO ENSURE NATIONAL PARTICIPATION
1. Regulation of inflow of expatriates; expatriate workers must acquire
work permits.
2. Requirement to develop Nationalisation Plans for expatriate positions
3. Approval of organisation structures for oil companies
4. Streamlining the procurement procedures for oil companies
5. Production Sharing Agreements (PSAs) provide for State Participation
in the range of 15% to 20%
6. Several aspects of national participation have been included in the
new petroleum legislation.
7. Capacity Building and Skills Development

14
MÌNÌSTRYOF ENERGYAND
MÌNERAL DEVELOPMENT
THE REPUBLIC OF UGANDA
MINISTRYOF ENERGYAND
MINERAL DEVELOPMENT
THEREPUBLICOF UGANDA
P e t r o l e u m E x p l o r a t i o n a n d P r o d u c t i o n D e p a r t me n t
REGULATORY REQUIREMENTS FOR STATE PARTICIPATION AND
NATIONAL PARTICIPATION
The new law provides for the following;
 The Government may participate in petroleum activities through a specified
participating interest in a PSA
 Licensee, its contractors and subcontractors shall give preference to
Ugandan citizens and companies when procuring goods and services
 Obligation to notify Ugandan citizens and companies about upcoming
contracts and the HSE standards required by the licensee
 Licensee is obliged to train Ugandans in all phases of the petroleum
activities
 Government to prescribe requirements for technology transfer and skills
training – and to share the responsibility with the licensee
 A report of local goods and services utilized during the year, and a detailed
program for training and employing Ugandans to be submitted to
government


15
MÌNÌSTRYOF ENERGYAND
MÌNERAL DEVELOPMENT
THE REPUBLIC OF UGANDA
MINISTRYOF ENERGYAND
MINERAL DEVELOPMENT
THEREPUBLICOF UGANDA
P e t r o l e u m E x p l o r a t i o n a n d P r o d u c t i o n D e p a r t me n t
16
NATIONAL ENTREPRENEURS
National Entrepreneurs are actively involved in provision of
services in the sector in the following areas;
1. Civil Works and Engineering,
2. Medical Services,
3. Clearing and Forwarding,
4. Environment Services (Consultancy and Waste Handling).
5. Security,
6. Catering and Camp Management
7. Freight Forwarders/Courier services
8. Rig Services( Movement and Mud logging)
9. Office Facilities and Equipment
10. Equipment lifting services
11. Engineering services

ACHIEVEMENTS - NATIONAL PARTICIPATION (1)
MÌNÌSTRYOF ENERGYAND
MÌNERAL DEVELOPMENT
THE REPUBLIC OF UGANDA
MINISTRYOF ENERGYAND
MINERAL DEVELOPMENT
THEREPUBLICOF UGANDA
P e t r o l e u m E x p l o r a t i o n a n d P r o d u c t i o n D e p a r t me n t
17
EMPLOYMENT BY OIL COMPANIES
• Licensed companies in the country
are employing an increasing number
of Ugandans
• Tullow employees a total of 203
people out of which 80% are
Ugandans
• CNOOC plans to employee 115
people out of which 70% are
Ugandans
• Total plans to employ a total of 178
people out of which 60% are
expected to be Ugandans
• These numbers are expected to
increase as more Ugandans acquire
skills in the oil and gas sector.
ACHIEVEMENTS - NATIONAL PARTICIPATION (2)
Hundreds of semi-skilled and unskilled workers
are employed from the local communities during
operations
MÌNÌSTRYOF ENERGYAND
MÌNERAL DEVELOPMENT
THE REPUBLIC OF UGANDA
MINISTRYOF ENERGYAND
MINERAL DEVELOPMENT
THEREPUBLICOF UGANDA
P e t r o l e u m E x p l o r a t i o n a n d P r o d u c t i o n D e p a r t me n t
18
INTERNATIONAL OIL SERVICES COMPANIES
 Some of the world’s largest oil service companies now resident and
have opened bases and yards in the country;
 Schlumberger; US$79.57 billion
 Halliburton; US$24.64 billion
 Baker Hughes; US$16.74 billion
 Weatherford; US$8.91 billion
 These service companies are also providing training and employment
opportunities to Ugandans


ACHIEVEMENTS - NATIONAL PARTICIPATION (3)
MÌNÌSTRYOF ENERGYAND
MÌNERAL DEVELOPMENT
THE REPUBLIC OF UGANDA
MINISTRYOF ENERGYAND
MINERAL DEVELOPMENT
THEREPUBLICOF UGANDA
P e t r o l e u m E x p l o r a t i o n a n d P r o d u c t i o n D e p a r t me n t
OPPORTUNITIES AND BENEFITS
Corporate Social Responsibility Initiatives.
• Support to Health, Education and Social
Enterprise
Infrastructure Development.
• Improved road networks and access to
previously remote areas
• Improved communication facilities



Ministry of Energy and Mineral Development
19
Kaiso Primary School, Hoima
Construction of Hoima-Buseruka-
KaisoTonya road
Buliisa Health Centre IV
MÌNÌSTRYOF ENERGYAND
MÌNERAL DEVELOPMENT
THE REPUBLIC OF UGANDA
MINISTRYOF ENERGYAND
MINERAL DEVELOPMENT
THEREPUBLICOF UGANDA
P e t r o l e u m E x p l o r a t i o n a n d P r o d u c t i o n D e p a r t me n t
Service Industry
 Drilling Products and Services
 Reservoir Engineering studies
 Transport
 Clearing and forwarding
 Environment consultancy
 Construction/ Civil works
 Fabrication and Facility Maintenance
(plumbing, electrical, mechanical)
 Man power management services –
recruitment
 Heavy equipment and machinery
(cranes, folklifts)
 Support services (Catering, Camps etc)
 Banking & Insurance
 Legal services
 Health services
 Housing
 Vocational training in relevant skills
 Supply of Agricultural products:
Selected Examples of Investment Opportunities
Exploration and Development
• Participation in licensing rounds
• Geophysical surveys, particularly seismic
• Drilling , FEED and EPC
• Equipment supply and/ or leasing (boats, barges, house
boats, etc)
• Supply of casings for boreholes
Partnerships
 With licensed Companies
 With Government to:
 Develop required infrastructure
 create training institutions specialising in petroleum
Production
 Crude oil transportation & storage
 Refining and other infrastructure developments like
pipelines
 Power generation by Independent Power Producers
 Future petrochemical industry
1. Establishment of an Institutional framework for
national Participation.
a) Establish a government body for national content enhancement
b) regulate procedures for procurement
c) define and operationalize how national content shall be measured
d) enforce oil companies to commit to local content development
f) develop a national content policy and ensure that its an integrated
part of the national development plan
g) devise mechanisms to deal with the corruption perception



GOVERNMENT’S VISION FOR LOCAL PARTICIPATION (1)
21

GOVERNMENT VISION FOR LOCAL PARTICIPATION (2)
2. Capacity building
Strengthen the Capacity for vocational
training

 Facilitate the establishment of
Education Training centers
 Promote the establishment of
institutions of excellence for higher level
of education


22
GOVERNMENT VISION FOR LOCAL PARTICIPATION(3)

3. Enterprise development



Develop an adequate capacity building
program for the industry
Encourage the teaming between Ugandan and
foreign firms
Establishment of an SME program for the
petroleum sector
Identification of Industry projects with a large
market potential
23
GOVERNMENT VISION FOR LOCAL PARTICIPATION(4)
4. Facilitating national participation

 Ensure that Contracts for works, goods
and services in the Oil and Gas Sector are
structured to align with local capacity

 Establishment of a central information
office for national content
 Establishment of a national register for
prequalified companies
 Regulate the inflow of expatriates

24
GOVERNMENT VISION FOR LOCAL PARTICIPATION(5)
5. Monitoring national content achievements

 Develop and apply a holistic approach
to measure and monitor national
content
 Establish a system for evaluation of
national content performance



25
MÌNÌSTRYOF ENERGYAND
MÌNERAL DEVELOPMENT
THE REPUBLIC OF UGANDA
MINISTRYOF ENERGYAND
MINERAL DEVELOPMENT
THEREPUBLICOF UGANDA
P e t r o l e u m E x p l o r a t i o n a n d P r o d u c t i o n D e p a r t me n t
CONCLUSION
26
The Government is committed to National Content Development
Several initiatives are underway to ensure maximisation of
national participation in the Sector.
The industry requires high quality services
There is need to show improvement and dynamism
The Companies must be able to compete on prices and project
delivery.
The industry requires high safety, Environment and Health
standards and certification.
The industry is hi-tech and capital intensive


Petroleum Exploration and Production Department
Ministry of Energy and Mineral Development
Email: pepdebb@petroleum.go.ug
Web: www.petroleum.go.ug

27

Sign up to vote on this title
UsefulNot useful