Uganda in talks with UAE’s Alpha MBM over oil refinery project

Uganda is in talks to build a $4 billion refinery for some of its crude oil with Dubai-based Alpha MBM led by Sheikh Mohammed bin Maktoum bin Juma Al Maktoum, Reuters reported on Tuesday, citing Uganda’s energy minister.

Amid its inability to secure funding on time, Uganda ended talks with a consortium that included a division of the U.S. firm, Baker Hughes in July of last year.

The African country’s developing hydrocarbon industry depends on the 60,000 barrels per day refinery.

“Expressions of interest were received from several potential investors and they were evaluated following which a memorandum of understanding was signed on the 22 of December 2023,” Minister of Energy and Mineral Development Ruth Nankabirwa said at a news conference.

The Ugandangovernment and Alpha MBM Investments began negotiations over the important commercial details on January 16 and are anticipated to finish within three months, Nankabirwa added.

Furthermore, Uganda expects to begin commercially extracting crude from fields in the Albertine Rift Basin in 2025, in the west of the country, close to the Democratic Republic of the Congo border.

The government jointly manages the fields with China’s CNOOC, France’s TotalEnergies, and the state-run Uganda National Oil Company.

Nankabirwa also added that CNOOC had received permission from Uganda on Tuesday to produce Liquefied Petroleum Gas at a plant that would be built in the Kingfisher development area, where CNOOC is currently operating. However, the minister did not specify the annual production of gas that CNOOC would produce. It is estimated that Uganda possesses 500 billion cubic feet of gas reserves.

The administration of President Yoweri Museveni hopes to increase employment rates and gain from technology transfer by processing part of its crude domestically.

Uganda has two commercial oil development fields, one of which is Kingfisher, and the second is Tilenga operated by TotalEnergies.