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Tanzania boosts interest in Ugandan oil refinery

Tanzania is keen to assist development of a new 60,000 barrel-a-day oil refinery in Uganda that has already been the subject of interest from three other East African nations.

According to Uganda's Energy Minister Irene Muloni, Tanzania's interest in the new plant is supplemented by that of Kenya, Rwanda and Burundi, with each of these countries offering an eight per cent stake and Uganda willing to take any or all shares that are not taken.

Uganda’s crude reserves of around 3.5 billion barrels are located in the Albertine Graben near the Ugandan border with the Democratic Republic of Congo, which is currently being developed by London-based Tullow Oil, China’s Cnooc, and France’s Total SA.

Wheels in motion

Some estimates note that output from the fields may start by 2018, with the government potentially naming a winning bid to build the refinery by the end of December.

According to Ms Muloni, the government will offer a 60 per cent interest in the refinery to a lead investor and retain a 40 per cent stake, part of which would be sold to interested countries.

Initially, the plans are to build a 30,000 barrel-a-day refinery with production starting in three years, with the capacity later doubled, at a cost of around $4 billion.

However, she noted that the refinery is only one destination of the crude that will be produced, with a decision yet to be made on the route of an oil pipeline that will move the oil for international export to Lamu on the Indian Ocean in neighboring Kenya.

This is set to be made in April, by which point the winning bidder for the new Ugandan refinery will be known; something Tanzania will have a keen interest in.

Gradual rise

It is the latest development in Tanzania's rise in the industry, with the country's Energy Ministry recently revealing that it has held talks with both Total and BP over oil and gas exploration in the country.

The oil giants are the latest in a long list of oil companies that have expressed interested in the nation, with Norway’s Statoil, Brazil’s Petrobras, Royal Dutch Shell, BG Group and Exxon Mobil all previously showing enthusiasm to explore.

The fierceness of the competition is due to Tanzania’s 53.2 trillion cubic feet of recoverable natural gas resources; something that can only be a good thing, according to Energy and Minerals Minister Sospeter Muhongo, who said he would like "many companies" to participate in this sector.

On a wider scale, East Africa is gradually becoming a hub for energy companies and oil and gas discoveries, with Tanzania and Uganda joined by Kenya, South Sudan, Mozambique and Ethiopia as countries that have recently discovered oil, indicating a prosperous future for the region.

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