* Taxes, refinery wrangles have held up commercial
* Government has said wants 40 percent stake in refinery
By Elias Biryabarema
KAMPALA, April 15 Uganda, France's Total and
China's CNOOC have agreed to build a small oil refinery in the
east African country, Uganda's government said, in a step
towards resolving disagreements that have delayed commercial oil
They agreed on an initial processing capacity of 30,000
barrels per day - well below the 200,000 bpd the government had
Explorers struck oil in east Africa's third largest economy
in 2006 but wrangling over taxes and the viability of a local
refinery have stalled production.
"The two parties however agreed to start with the refinery
size of 30,000 barrels per day," said a statement published by
the office of President Yoweri Museveni after he met executives
from Total and CNOOC.
Museveni stressed that he wanted a final deal quickly, in
the form of a memorandum of understanding that would include the
construction of a pipeline to neighbouring Kenya for exports.
"We have wasted too much time. We are now with the issue of
oil for seven years. We need to make our final decisions,"
Museveni told the oil companies and government officials.
Total and CNOOC entered Uganda's petroleum sector early last
after both took up a third each of British explorer Tullow Oil's
exploration assets for a total $2.9 billion.
Uganda has said it wants a 40 percent stake in the refinery
though it is not clear where financing for the project will come
The country estimates its crude reserves at 3.5 billion
Rather than build a major refinery in Uganda, Total and
CNOOC had favoured a pipeline to export most of its crude via
Kenya's Indian Ocean coastline, saying there was insufficient
local demand for a refinery of the size Uganda wanted.
The agreement appears to be a success for the approach
advocated by the oil companies
Museveni wanted to refine crude locally to boost domestic
earnings, help fund new infrastructure and provide cheaper
The president still targets a refinery with an eventual
capacity of 60,000 bpd, projecting that demand in the local
market will keep rising, according to the statement.
In February, Uganda's parliament passed a law paving the way
for the construction of a refinery. A U.S. investment firm,
Taylor-DeJongh, is helping the government secure financing for
the project, Ugandan officials say.