Uganda Gets in the Oil Game with New Refinery Deal
- A GE-led consortium of investors will build a $4 billion refinery in Uganda
- Uganda’s first oil output will begin in 2020
GE (GE -1.19%) does more than make your washing machine. A consortium of investors led by GE secured an award from the Ugandan government to construct the country’s first oil refinery. Will GE position the Ugandan government to set a new precedent for developing oil resources in Africa?
Why This Matters: Uganda’s entry into the oil and gas industry shifts the center of balance slightly towards East Africa. The energy industry across Africa has been dominated by countries like Nigeria, Angola, and Algeria. Uganda’s new oil refinery is slated to produce 60,000 barrels per day (bpd). That figure is 13% of the 445,000 bpd Nigeria produces through its four refineries. Analysts project Uganda has 1.7 billion barrels of recoverable oil in its reserves. They also project the discovered wells will be able to produce 230,000 bpd at full production.
The development of an oil refinery in Uganda is set to be a significant job creator as the country builds an ecosystem around the project. Analysts forecast 150,000 jobs will emerge from the construction of the refinery and the development of infrastructure necessary to support it.
Situational Awareness: The Ugandan government would do well to ensure it does not make the same mistakes made in structuring the $1.3 billion Bujagali Dam deal. The construction of the dam was supposed to make electricity more affordable for Ugandans. Due to the high amount of debt that went into the project, the cost of electricity wound up being more expensive than projected leaving many Ugandans unable to afford the power.
CBx Vibe: “Energy” Drake