Executive Summary

April, 2017 EXECUTIVE SUMMARY o much is going across all the sec- June this year. Kenya Pipeline Company tors we cover in Uganda. Cnooc, recently signed a three-year lease agree- Sa company that prefers to stay in ment to take over the facilities of Kenya the shadows, is slowly positioning itself Petroleum Refineries Limited at Mom- in preparation for the construction of basa, the last point that the crude will the crude oil pipeline from Uganda to be received before it is exported out of Tanzania. the country. This report goes further to Dao Marble Uganda Limited, the show what else Kenya Pipeline is doing company that once promised to take and what that means for the region. Uganda’s marble to foreign markets to In Tanzania, Africa’s richest billionaire, compete with other first-class gems, is Aliko Dangote, has managed to get the limping as a result of financial troubles. government there to extend power to One bank, company staff and other ser- his cement company. The Dangote group vice producers are hounding a top Dao was increasingly getting frustrated at the Marble official over unpaid dues. huge amounts of money it was spend- The Uganda Electricity Generation ing to buy diesel to power its machines. Company Limited is drawing up new An executive order from President John rules of engagement to deal with Chi- Pombe Magufuli has seen Tanzania Pe- na International Water and Electric, the troleum Development Corporation en- Chinese contractor at Isimba dam, after sure that gas power is taken to the plant. a series of letters and approved engi- The first power plant to serve three neering designs were ignored. Short of East African countries was launched in that, Uganda could launch a dam that Rwanda. The energy output from the has defects it will need repairs in its ear- 80MW Rusumo power plant will be ly life. equally shared among Rwanda, Tanzania With Kenya heading for its general and Burundi. The plant, to be built along elections in August, East Africa’s biggest River Kagera, brings renewed hope of economy is in a race against time to more of such cross-border infrastructure prepare for its first export of crude by being undertaken. OIL AND GAS Oil players tap Equatoria Guinea’s Obiang as logistics firms eye deals Equatoria Guinea's President Teodoro Obiang Nguema Mbasogo ome oil players are aggressively Elly Karuhanga, the chairman of the lobbying President Yoweri Musev- Uganda Chamber of Mines and Petro- Seni’s handlers to have him come leum, told us it is almost certain Obiang along with Equatoria Guinea’s President will attend one of the events. The addition Teodoro Obiang Nguema Mbasogo for a of a logistics expo to the annual oil con- logistics expo and an oil convention slat- vention adds further weight to the events. ed for April 25 – 27 at Kampala Serena Uganda’s logistics industry is slowly re- hotel. Although the Uganda Chamber of covering from a difficult period of low Mines and Petroleum has confirmed that sales and is looking to exploit the oppor- Museveni and Obiang will be chief guests tunities within the oil industry by holding at the annual oil convention, State House an expo that, among other things, seeks continues to keep the two heads of state’s to raise debate of the possibility of the programme guarded. country becoming a regional hub. There are few synergies, if any, between The expo, which is being organised by the oil industry of Equatoria Guinea and the Uganda Freight Forwarders Associ- Uganda’s. However, the attendance of ation, will be held ahead of the fourth Obiang could open the way for companies annual oil convention, which is hosted by to consider engaging in partnerships be- the Uganda Chamber of Mines and Petro- tween the two countries. Equatoria Guin- leum. ea is one of Africa’s main oil producers. The logistics industry could see its for- TO NEXT PAGE OIL AND GAS FROM PREVIOUS PAGE Equatoria Guinea’s Obiang to speak- at oil and logistics forum tunes revived at a time when Uganda has nearly ground to a halt during the protracted signed key agreements, such as those for an negotiations between the major oil firms and export crude oil pipeline, for the development government over tax and some key investment stage of its oil industry. Uganda is also prepar- decisions such as the amount of recoverable ing to kick off the next stage of oil exploration, oil. Logistics companies such as ThreeWays where the logistics companies will be required have publicly pointed out how the low activity to move drilling equipment to the oil wells. in the oil industry hurt them, while partnerships Possibly no sector was hurt as much as the among some logistics firms collapsed. logistics industry when Uganda’s oil industry French major Total takes firm hold of East Africa French firm Total has firmly positioned itself as the main oil player in East Africa after acquiring Gulf Africa Petroleum Corporation’s (Gapco’s) assets in Kenya, Uganda and Tanza- nia. The acquisition completes Total’s ambitious footprint in East Africa’s oil market chain, where it is set to tussle it out with Vivo Energy, the company running the Shell brand, in the downstream segment. Under the deal, Total acquired two logistics terminals in Mombasa, Kenya and Dar es Salaam, Tanzania, as well as a retail network of more than a hundred service stations in all the three countries. Total, however, remains unrivalled in the heavily capitalized upstream market where it is leading the construction of a crude oil pipeline between Uganda and Tanzania. The Gapco deal was announced nearly a year ago but had to go through some regu- latory hoops before it was rubberstamped. There is no official declaration of the value of the deal. East Africa presents a lot of opportunities for Total. Uganda’s oil industry, where less than half of the exploration areas remain untouched, and Tanzania’s gas reserves, discovered at a time a time of increasing consumption of Liquefied Petroleum Gas (LPG), all present the French company’s opportunities to tap into for a region, whose consumption of petroleum products averages a 10 per cent growth. OIL AND GAS Cnooc prepares to build Uganda Tanzania crude oil pipeline hinese firm Cnooc is set to construct the crude export pipeline Cfrom Hoima in western Uganda to the Tanzanian port of Tanga, according to a source within Cnooc. We have been told by different sources that a number of staff from China have already flown into the country and are working intensely to have the designs in place in preparation for the construction of the pipeline. Also, meetings between Total E&P and Cnooc – the two main joint venture companies - are said to have intensified lately the crude pipeline, and we were told ited, a waste treating company, is over- as the they race to have a pipeline in place there has not yet been a definite position seeing the waste treatment process at by 2020 at the earliest. on who will construct the pipeline. the Kingfisher field, undertaking what is Top managers at Cnooc were expected “Following the completion of the Front technically known as a treatment of Con- to fly to Tanzania in April to continue with End Engineering Design by Gulf Inter- taminated Synthetic Based Muds. the route survey for the crude oil export state Engineering (GIE), the US (Houston) At least two things are happening at pipeline. A survey for the Tanzanian route based company selected to undertake the Kingfisher field with regards to waste was supposed to have been completed the basic engineering study to provide treatment: All Ways is recovering waste by December, according to a ministerial detail and finalise the technical design of oil. The company will also treat the waste. statement that Uganda’s Energy Min- the project, several calls for tenders will The entire process of recovering the oil ister Irene Muloni made to Parliament be launched to select the best company and treating the waste is supposed to late last year. It is not clear why there has for the detailed engineering, procure- take six months, but it will take more time been this delay. The Ugandan part, Mulo- ment and construction of the East African because, according to our source, some ni told Parliament then, was completed. Crude Oil pipeline project,” Total’s Corpo- of All Ways’ equipment was damaged The crude oil export pipeline is estimated rate Affairs manager Ahlem Friga Noy told while being transported to the site. to cost about $3.5 billion. According to us. In March, Cnooc contacted Tullow Oil what our source told us, French firm Total Uganda’s crude oil, which solidifies and officially made its interest in buying E&P will mainly come up with the studies quickly, is expected to be heated through- half of the 21.57 per cent stake that the and the sourcing for the financing, while out the 1,445km stretch to Tanga. UK firm had agreed to sell in its Uganda Cnooc will construct the 24-inch diame- Away from the pipeline, Cnooc is cur- fields to Total E&P. ter pipeline. Tullow Oil, the third partner rently undertaking waste treatment at The completion of the transaction, in this joint venture partnership, will be a its Kingfisher field, which is located on which is subject to government approval, non-operator and will only contribute its the banks of Lake Albert. The Kingfisher will see Total and Cnooc have an equal share to the financing of the pipeline.

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