Uganda Refinery Project is planned to be developed to boost energy security in the East African country by reducing the need to import petroleum products.
UAE-based investment firm Alpha MBM Investments is the lead partner in the oil refinery project. The Government of Uganda’s share lies with the Uganda National Oil Company through its subsidiary Uganda Refinery Holding Company.
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The development of the refinery is estimated to cost $4bn. Once complete, the project will have a crude processing capacity of 60,000 barrels of oil per day.
Uganda Refinery Project Location
The Uganda Refinery Project will be located at Kabaale, Buseruka Sub-County in Hoima District. The Uganda Refinery Project includes:
Land acquisition for the refinery commenced in 2012. A Resettlement Action Plan (RAP) for project affected persons (PAPs) was also completed in the same year with cash compensations to the PAPs commencing in December 2013.
According to the Petroleum Authority of Uganda, 2,625 PAPs out of 2,670 received compensation by December 2017.
Overall, around 29km2 of land is expected to be acquired for the refinery and related infrastructure.
Background
In 2019, the government completed and approved the final refinery configuration study, which determined that the refinery would be a Residue Fluid Catalytic Cracker (RFCC) type.
In 2021, the Front-End Engineering Design (FEED) for the refinery was finalised and later approved by the Cabinet.
The Petroleum Authority of Uganda (PAU), the sector regulator, also approved the FEED.
After the Project Framework Agreement with previous partners expired in June 2023, multiple entities expressed interest in the project. Following a comprehensive evaluation, Alpha MBM was selected as the preferred partner.
In December 2023, a Memorandum of Understanding (MoU) was signed between the Government of Uganda and Alpha MBM Investments setting out cooperation and negotiation terms for the refinery project.
In January 2024, the final negotiations with Alpha MBM Investments began for the financing and construction of the domestic refinery.
As of November 2024, Uganda has decided to fully finance the oil refinery through equity, after the government and Alpha MBM Investments decided to halt efforts to secure funding from international financial markets.
Uganda Refinery Project Details
The Uganda Refinery Project infrastructure will include a 60,000-barrel refinery in Kabaale in Hoima; the Mbegu Water Intake and its corresponding water pipeline; and a 211 km long multi-product pipeline to transport refined products from the refinery to a storage terminal at Namwabula in Mpigi District.
A storage terminal will also be built for the refinery products at Namwabula.
The project is proposed to be developed in two phases of 30,000 barrels per day (bpd) in order to reduce implementation risk and financial exposure. It will also help in determining the absorptive capacity of the market.
The Uganda Refinery is expected to receive supplies from fields hosting more than 6.5 billion barrels of crude. It will primarily serve the petroleum product markets in Uganda and its western neighbours.
Contractor Involved
In 2010, Foster Wheeler conducted a detailed feasibility study of the refinery. It assessed the entire petroleum value chain and different refinery configurations.
Uganda Refinery Project Benefits
According to a report by Uganda’s Ministry of Energy and Mineral Development, the refinery project is expected to serve a market with a requirement of 232,000bpd in its first year of operations.
The refinery’s development will help reduce supply constraints caused by logistical disruptions during imports from Kenya.
The development of the project will also yield higher gross refining margin (GRM) than global levels due to proximity, composition of crude oil, and the addressable market.
