(Ecofin Agency) - Planned early export of output from Uganda’s crude deposits is currently unlikely due to the magnitude of the infrastructure projects needed to transport the fuel out of the country, Bloomberg reports.

The challenges include lack of pipeline, refinery and export facilities.
Let’s be reminded that the Ugandan government said that it expects to start shipping crude within five years but in order for that to happen, it must succeed in dealing with the challenges being faced by other countries in the region such as Mozambique and Tanzania, where inadequate finance and technical capacity to construct various, capital-intensive infrastructure projects is hindering the commencement of natural gas production.

Uganda where oil was discovered in 2006, has an estimated 1.7 billion barrels of recoverable oil at the fields located in the Lake Albert basin where the government expects Tullow, Total and China’s Cnooc Ltd. to start pumping oil by 2021 and has estimated to receive $43 billion of revenue from over 25 years.

According to George Cazenove, a spokesman for Tullow Oil, about $8 billion is needed in bringing the fields to commercial production, although engineering design work on the project is yet to start.

In order for production to start in 2021, Tullow would be required to make a final investment decision on the project by 2018, Cazenove said adding that the crude would then have to be transported through a not yet constructed 1,400-kilometer pipeline to the Indian Ocean port of Tanga in neighboring Tanzania.

Robert Kasande, the acting head of the state-run Petroleum Directorate has said that the East African Country expects the pipeline, backed by Total, to be completed in three years.

Uganda is targeting production of 200,000-300,000 barrels per day by 2021-22, “there is the potential for further politically driven delays in Uganda should the government insists that oil production be preceded by the proposed 60,000 barrels-per-day refinery. Market realities will also likely contribute to delays with crude prices having dropped 45 percent in past two years. Low oil prices will be a drag on project timelines as operators grapple with a difficult financing environment,” said Clare Allenson, an Africa analyst at Eurasia Group.

Anita Fatunji