Uganda in final phase of talks with oil refinery bidders

December 10, 2014 | Africa, Government & Regulations, Refining & Processing

$4 Billion Project Will Create 60,000 Barrels a Day Oil Refinery

Kampala, Uganda | -The Ugandan government has entered the final phase of talks with two consortia from Russia and South Korea expecting to announce the final bidder for its maiden oil refinery in February next year, the energy and minerals ministry said on Wednesday.

After weeks of talks, the government asked the consortium led by Korea’s SK Group and another led by RT Global Resources from Russia to present their final technical and financial offers by January 19, Fred Kabagambe Kaliisa, the ministry’s permanent secretary said.

The bidding process now enters its most decisive phase which will see the country issue its largest ever contract in the energy sector allowing the construction of a 60,000 barrels-a-day refinery. The project is expected to cost up to $4 billion.

“The bidders will prepare and submit their refined technical, financial and commercial and legal offers,” the ministry said. “They will also detail their financial and long-term business plans and review the terms of the different project agreements proposed by government.”

But the development also comes as crushing oil prices are putting global oil companies under pressure to rethink expenditure on new projects. Analysts have warned that projects in frontier markets are particularly at a greater risk. Company officials couldn’t be reached for immediate comment.

In June, Uganda selected the two bidders from a group of six companies and was initially expected to announce the winning bidder in December. Mr. Kaliisa said that during negotiations, SK Group and RT Global Resources asked for an incentive package which required additional time for consultations with other government agencies, delaying the final selection.

The refinery contract is also viewed as the final development of the country’s oil fields, now estimated to contain some 6.5 billion barrels of crude oil and 500 billion cubic feet of natural gas. Oil production is expected to start by 2018, hitting plateau production of around 220,000 barrels-a-day by around 2022.


(END) Dow Jones Newswires.