Iran to help Uganda construct refinery

Uganda President Yoweri Museveni, siding with officials of his government against plans by international oil companies, said his country will build a domestic refinery with Iranian assistance.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, May 26 -- Uganda President Yoweri Museveni, siding with officials of his government against plans by international oil companies, said his country will build a domestic refinery with Iranian assistance.

"We are more inclined to building a refinery than exporting unprocessed crude oil," he said, coming down against Tullow Oil and its partner Heritage Oil, which prefer construction of an oil pipeline from their fields in Uganda to the Kenyan port of Mombasa to export crude.

Iran and Uganda reached an agreement concerning the refinery project, as well as other oil and gas developments, during a 3-day visit by Museveni to Tehran, where he held talks with Iran's President Mahmoud Ahmadinejad.

A communique issued at the end of Museveni's visit said Iran had signed a cooperation agreement that included funding for the entire "value chain" of Uganda's oil production.

"Regarding the field of energy in particular, the two leaders agreed to consider cooperation in building an oil refinery in Uganda," the communique said, adding, "Iran also expressed its readiness to invest in the entire value chain of Uganda's petroleum industry."

Ugandan officials have long disagreed with the views of Tullow and its partner Heritage Oil over the need to construct an oil refinery versus an export pipeline.

"Our objective is to process the oil. We don't want to export it. Our aim is to get an economic return, to get jobs (and) investment. We don't want anything raw to get out," said Uganda's energy minister Hillary Onek at the recent East African Petroleum Conference in Mombasa.

But Heritage vice-president for exploration and production, Brian Smith, demurred on the idea of a full-scale refinery for Uganda, saying that estimated production was not high enough to justify the 100,000 b/d, $1.3 billion plant the Ugandans were reported to be considering (OGJ, Mar. 16, 2009, p. 40).

Contact Eric Watkins at hippalus@yahoo.com.

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