Uganda Government's Vision for Local Content Participation in the Oil Sector

8/22/2019 Uganda Government's Vision for Local Content Participation in the Oil Sector

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GOVERNMENT'S VISION FOR LOCAL PARTICIPATION IN THE OIL SECTOR.

Presented By:

Betty Namubiru | National Content & Capacity Building Officer

Petroleum Exploration and Production Department

at

THE 2ND ANNUAL LOCAL CONTENT CONFERENCE

THURSDAY July 10th 2013

1

MINISTRY OF ENERGY AND MINERAL DEVELOPMENT


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P e t r o l e u m E x p l o r a t i o n a n d P r o d u c t i o n D e p a r t m e n t

PRESENTATION OUTLINE

1. INTRODUCTION

2. LEGAL AND REGULATORY FRAMEWORK

3. NATIONAL OIL AND GAS POLICY FOR UGANDA

4. GOVERNMENTS VISION

5. OPPORTUNITIES AND BENEFITS

6. CONCLUDING REMARKS

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STATUS OF THE OIL AND GAS SECTOR (1)

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The Albertine Graben is subdivided into17 Licence Areas

Four (4) Active Production SharingAgreements (PSAs)

3 License Operators (Tullow, Total,CNOOC)

Next round of licensing to be undertakenthrough competitive bidding

Licensees in the country changing fromsmall to major oil companies.

ACREAGE/LICENCES


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4

DATA ACQUIRED

WELLS DRILLED; 90 Exploration and Appraisal

Wells; 79 successful (87% success rate)

Drilling success trend (Source : PEPD)

JOBI DISCOVERY

JOBI-1

JOBI-2

JOBI-2A

JOBI-3

RII DISCOVERY

RII-1

NGIRI DISCOVERY

NGIRI-1

NGIRI-2

NGIRI-3

MPYO DISCOVERY

MPYO-1

MPYO-3

GUNYADISCOVERY

GUNYA-1

NGEGEDISCO VERY

NGEGE-1

NGEGE-2 & 2A

NGEGE-3

NGEGE-4

NGEGE-5

NGEGE-6

NGARADISCOVERY

NGARA-1

KIGOGOLEDISCOVERY

KIGOGOLE-1

KIGOGOLE-2

KIGOGOLE-3

KIGOGOLE-4

KIGOGOLE-5

KIGOGOLE-6 &6A

TAITAI DISCOVERY

TAITAI-1

TAITAI-1A

KASAMENE &WAHRINDHI

DISCOVERIES

WAHRINDI-1

KASAMENE-1

KASAMENE-2

KASAMENE-3&3A

NSOGADISCOVERY

NSOGA-1

NSOGA-2&2A

NSOGA-5

KARUKADISCOVERY

KARUKA-1

KARUKA-2

NGASSADISCOVERY

NGASSA-1

NGASSA-2

WARAGADISCOVERY

WARAGA-1

MPUTADISCOVERY

MPUTA-1

MPUTA-2

MPUTA-3

MPUTA-4

MPUTA5

NZIZI DISCOVERY

NZIZI-1

NZIZI-2

NZIZI-3

KINGFISHER DISCOVERY

KINGFISHER-1&1A

KINGFISHER-2

KINGFISHER-3&3A

TURACO DISCOVERY

TURACO-1

TURACO-2

TURACO-3

NGAJI-1

MVULE-1

ITI-1

AVIVI-1

AWAKA-1

KANWYATABA-1

1 1 1 1

5 5

13

9 10 8

223

3

2

0

1

2

3

4

5

6

7

8

0

5

10

15

20

25

30

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Proje

Number

ofWells

YEAR

DRILLING SUCCESS TREND IN THE ALBERTINEGRABEN

Discovery

88%

112%

DRILLING SUCCESS RATE

Success


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21 oil and/or gas

discoveries made to date.

Over 3.5 billion barrels of

STOIIP established.

Estimated 1.2 billion

barrels of recoverable oil

equivalent.

Appraisal of the

discoveries is ongoing.

Less than 40% of the

Albertine Graben has been

evaluated. 5

DISCOVERIES AND RESOURCES

Discoveries in the Albertine Graben (Modified from Rubondo


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INVESTMENTS IN THE SECTOR(1)

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INVESTMENTS MADE

1st Major Discovery


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INVESTMENTS IN THE SECTOR (2)

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INVESTMENTS MADE

Industry is capital intensive and high risk

So far, risk capital invested in seismic surveys, exploratory and appraisal drillingto a total of US$1.7 billion

Sharp increase in investment after first discovery This is significant investment and will rise to many fold with further investments

expected in field development, production of the crude oil, processing andtransportation facilities

The costs incurred in the sector in the country so far are classified as FindingCosts

Means the costs of finding commercial reserves of oil in USD per barrel

On the global scale, the finding costs range between $5 - $25 per barrel


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8

National Content (1)

DEFINITION OF NATIONAL CONTENT

Value Addition

In Uganda, by Ugandans,

by the use of Ugandan materials,

services produced by Ugandans

& the use of facilities in Uganda.

Participation of Ugandans

and Ugandan Firms in the

supply of works, goods and

services to the Sector.


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National Content (2)

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NATIONAL CONTENT Vs. LOCAL CONTENTLocal (community) content refers to contracts and

employment provided to the communities which are hosts

or immediate neighbours to the petroleum activities.

To meet a National content requirement; contracts or

employment shall be provided to an individual or company

from any part of the country.

Where capacity exists, consideration is given to local

content e.g. agricultural products, casual labour etc


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LEGAL AND REGULATORY FRAMEWORK

Ugandas Petroleum Exploration and Production is Governed by:

The Petroleum (Exploration, Development and Production) Act 2013

The Petroleum Regulations (1993)

Model Production Sharing Agreements (PSAs)

Environment, Wildlife, Water , Income Tax, Land, Statutes and Guidelines

The National Oil and Gas Policy for Uganda, 2008

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NATIONAL OIL ANDGAS POLICY

Policy Goal:To use the countrys oil and gas resources to contribute to early

achievement of poverty eradication and create lasting value to

society.

Policy has ten objectives, each with strategies and actions.

Policy available in print and website;www.petroleum.go.ug

An abridged and translated version of the policy is being

developed.

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STATUS OF POLICY IMPLEMENTATION (1)

Optimum National ParticipationObjective 7

Experience in the Industry has established that benefits form the sector areachieved through active participation of Local firms and individuals

Concluded a study on the opportunities and challenges for Ugandans

participation in the oil and gas sector in September 2011 and recommendations

are under implementation.

Copy of the study is on www.petroleum.go.ug

Oil companies are being compelled to employ Ugandans and give business

opportunities to Ugandan companies.

Various Ugandan companies are providing services to the industry; EnvironmentConsultancy, Civil Works and Construction, Transportation and Heavy lifting

Several aspects of local content have been included in the new petroleum

legislation.

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STATUS OF POLICY IMPLEMENTATION (2)

Skills requirement study for the oil and gas in the country to be undertaken.

Commencement of Uganda Petroleum Institute Kigumba artisans and technicians.

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Private institutions are introducing petroleum related courses.

Increased training of Ugandans in oil and gas professions abroad for both public and

private players

Development and Maintenance of National Skills and Expertise - Objective 8

First intake of 28 students completed during 2012 and

undertook industrial training in Trinidad and Tobago.

Second intake of 60 students commenced studies in 2011.

Undergraduate and post graduate studies in

Petroleum Geoscience at Makerere University.

The third intake of 80 students commenced studies in

2012/13

Second intake of 46 and first intake of 50 studentscommenced studies in 2011/12 and 2010/11 respectively


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STRATEGIES TO ENSURE NATIONAL PARTICIPATION

1. Regulation of inflow of expatriates; expatriate workers must acquire

work permits.

2. Requirement to develop Nationalisation Plans for expatriate positions

3. Approval of organisation structures for oil companies

4. Streamlining the procurement procedures for oil companies

5. Production Sharing Agreements (PSAs) provide for State Participation

in the range of 15% to 20%

6. Several aspects of national participation have been included in the

new petroleum legislation.

7. Capacity Building and Skills Development

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REGULATORY REQUIREMENTS FOR STATE PARTICIPATION AND

NATIONAL PARTICIPATION

The new law provides for the following;

The Government may participate in petroleum activities through a specifiedparticipating interest in a PSA

Licensee, its contractors and subcontractors shall give preference toUgandan citizens and companies when procuring goods and services

Obligation to notify Ugandan citizens and companies about upcomingcontracts and the HSE standards required by the licensee

Licensee is obliged to train Ugandans in all phases of the petroleumactivities

Government to prescribe requirements for technology transfer and skillstraining and to share the responsibility with the licensee

A report of local goods and services utilized during the year, and a detailedprogram for training and employing Ugandans to be submitted togovernment

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NATIONAL ENTREPRENEURS

National Entrepreneurs are actively involved in provision ofservices in the sector in the following areas;

1. Civil Works and Engineering,

2. Medical Services,

3. Clearing and Forwarding,

4. Environment Services (Consultancy and Waste Handling).

5. Security,

6. Catering and Camp Management

7. Freight Forwarders/Courier services8. Rig Services( Movement and Mud logging)

9. Office Facilities and Equipment

10. Equipment lifting services

11. Engineering services

ACHIEVEMENTS - NATIONAL PARTICIPATION (1)


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EMPLOYMENT BY OIL COMPANIES

Licensed companies in the countryare employing an increasing numberof Ugandans

Tullow employees a total of 203people out of which 80% areUgandans

CNOOC plans to employee 115people out of which 70% areUgandans

Total plans to employ a total of 178people out of which 60% are

expected to be Ugandans

These numbers are expected toincrease as more Ugandans acquireskills in the oil and gas sector.


Hundreds of semi-skilled and unskilled workersare employed from the local communities duringoperations


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INTERNATIONAL OIL SERVICES COMPANIES

Some of the worlds largest oil service companies now resident andhave opened bases and yards in the country;

Schlumberger; US$79.57 billion

Halliburton; US$24.64 billion

Baker Hughes; US$16.74 billion

Weatherford; US$8.91 billion

These service companies are also providing training and employment

opportunities to Ugandans



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OPPORTUNITIES AND BENEFITS

Corporate Social Responsibility Initiatives.

Support to Health, Education and SocialEnterprise

Infrastructure Development.

Improved road networks and access to

previously remote areas Improved communication facilities

Ministry of Energy and Mineral Development19

Kaiso Primary School, Hoima

Construction of Hoima-Buseruka-

KaisoTonya road

Buliisa Health Centre IV


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Service Industry

Drilling Products and Services Reservoir Engineering studies Transport Clearing and forwarding Environment consultancy Construction/ Civil works

Fabrication and Facility Maintenance(plumbing, electrical, mechanical)

Man power management services recruitment

Heavy equipment and machinery(cranes, folklifts)

Support services (Catering, Camps etc) Banking & Insurance Legal services Health services Housing Vocational training in relevant skills Supply of Agricultural products:

Selected Examples of Investment Opportunities

Exploration and Development Participation in licensing rounds Geophysical surveys, particularly seismic Drilling , FEED and EPC Equipment supply and/ or leasing (boats, barges, house

boats, etc) Supply of casings for boreholes

Partnerships

With licensed Companies

With Government to: Develop required infrastructure create training institutions specialising in petroleum

Production Crude oil transportation & storage Refining and other infrastructure developments like

pipelines Power generation by Independent Power Producers Future petrochemical industry


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1. Establ ishment o f an Ins t i tut ional framework for

nat ional Partic ipat ion .

a) Establish a government body for national content enhancement

b) regulate procedures for procurement

c) define and operationalize how national content shall be measured

d) enforce oil companies to commit to local content development

f) develop a national content policy and ensure that its an integrated

part of the national development plan

g) devise mechanisms to deal with the corruption perception

(1)

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GOVERNMENT VISION FOR LOCAL PARTICIPATION (2)

2. Capacity building

Strengthen the Capacity for vocationaltraining

Facilitate the establishment of

Education Training centers

Promote the establishment of

institutions of excellence for higher levelof education

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GOVERNMENT VISION FOR LOCAL PARTICIPATION(3)

3. Enterprise development

Develop an adequate capacity building

program for the industry

Encourage the teaming between Ugandan and

foreign firms

Establishment of an SME program for the

petroleum sector Identification of Industry projects with a large

market potential

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4. Facilitating national participation

Ensure that Contracts for works, goodsand services in the Oil and Gas Sector are

structured to align with local capacity

Establishment of a central information

office for national content

Establishment of a national register for

prequalified companies

Regulate the inflow of expatriates

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5. Monitoring national content achievements

Develop and apply a holistic approachto measure and monitor national

content Establish a system for evaluation of

national content performance

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CONCLUSION

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The Government is committed to National Content Development

Several initiatives are underway to ensure maximisation of

national participation in the Sector.

The industry requires high quality services

There is need to show improvement and dynamism

The Companies must be able to compete on prices and project

delivery.

The industry requires high safety, Environment and Health

standards and certification.

The industry is hi-tech and capital intensive


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Petroleum Exploration and Production DepartmentMinistry of Energy and Mineral Development

Email: [email protected]: www.petroleum.go.ug

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mailto:[email protected]:[email protected]://www.petroleum.go.ug/mailto:[email protected]://www.petroleum.go.ug/http://www.petroleum.go.ug/http://www.petroleum.go.ug/mailto:[email protected]:[email protected]

Documents

Uganda Government's Vision for Local Content Participation in the Oil Sector