In what is termed as a big step in the energy sector of Uganda, the country’s Ministry of Energy and Mineral Development (MEMD), Uganda National Oil Company (UNOC), and a joint venture partner, Alpha MBM, have just signed an Implementation Agreement for the long anticipated Hoima Oil Refinery Project. This agreement was signed on Saturday in the presence of President Museveni at the country’s state house.
“I want to extend gratitude to His Highness Sheikh Mohammed Bin Maktoum and our allies from the UAE for their commitment to investing in Uganda,” President Museveni mentioned in reference to the Alpha MBM boss.
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Project Factsheet
Location: Kabaale, Buseruka Sub-County, Hoima District, Uganda.
Capacity:
- Planned for 60,000 barrels of oil per day (bopd).
- Proposed development in two phases of 30,000 bopd.
Significance:
- To boost Uganda’s energy security by reducing reliance on imported petroleum products.
- To serve the petroleum product markets in Uganda and neighboring countries.
Key infrastructure:
- 60,000-barrel refinery in Kabaale.
- Mbegu Water Intake and water pipeline.
- 211 km multi-product pipeline to a storage terminal in Namwabula, Mpigi District.
- Storage terminal for refined products in Namwabula.
Financials:
- Estimated project cost: approximately $4 billion.
- As of late 2024, Uganda has chosen to fully finance the refinery through equity.
Key points to note:
- The refinery is planned to process crude oil from Uganda’s Albertine Graben region, which holds significant oil reserves.
- The project has included land aquisition, and a Resettlement Action Plan(RAP) for affected people.
- The project has gone through feasibility studies, and Front-End Engineering Design (FEED) approvals.
- The refinery will be a Residue Fluid Catalytic Cracker (RFCC) type.
Related projects:
- Hoima–Kampala Petroleum Products Pipeline: This pipeline will transport refined products from the Hoima refinery to a distribution terminal near Kampala.
“Today, I witnessed the signing of a historic oil refinery implementation agreement between Uganda and Alpha MBM Investments LLC, a company based in the UAE. This agreement will foresee the establishment of a crude oil refinery in Hoima District. The refinery will have a capacity of 60,000 barrels per day,” he mentioned further.
”We must stop the exportation of raw materials and instead add value to everything we produce as a country.”
Capacity of Hoima Oil Refinery Project
The agreement that was signed will foresee the construction and operation of a 60,000 barrels per day refinery. Furthermore, the refinery facility is expected to be a crucial step in the country’s quest of unlocking value from its petroleum resources.
Additionally, the refinery is expected to be constructed within three years. This information was revealed by Uganda National Oil Company. Furthermore, the facility is expected to transform Uganda into a regional hub for both petroleum refining and distribution.
Challenges Facing the Project
This ambitious project was conceived more than ten years ago but faced delays due to funding hurdles and changing investor interest. The Hoima Oil Refinery Project is part of the country’s broader strategy to maximize benefits from approximately 6.5 billion barrels of crude oil that was discovered in the Albertine Graben.
Additionally, the refinery is being developed by Uganda Refinery Holding Company (URHC). This is a subsidiary of UNOC.
Significance of the Project
Once it starts operations, the facility will process the country’s crude oil into products such as gasoline, diesel, and jet fuel.
Additionally , it will cut Uganda’s reliance on imported redined fuel. Also, it will stabilize the country’s fuel prices and also boost the general national energy security.
Support Infrastructure for the Project
This ambitious facility will contain associated infrastructure that will support its operations. These are product pipeline, storage facilities, and access roads.
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Furthermore, Hoima International Airport is currently being built to support its logistics and the country’s future oil industry operations. The facility will also serve neighbouring countries like Kenya, DRC, Rwanda, and South Sudan. Also, these countries have expressed interest in becoming off-takers of refined products that will be produced.
Date of Production of the First Commercial Output
Lastly, the first commercial output from the refinery is expected to be around 2028. This aligns with the commencement of oil production from Tilenga and Kingfisher fields. These fields are run by TotalEnergies and CNOOC respectively.
Furthermore, with the implementation agreement of the project signed, it will be later followed by detailed engineering designs, securing funding, and finalizing the investment framework.
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