* Refinery to start at 20,000-25,000 bpd
* Output to eventually hit 200,000 bpd
By Elias Biryabarema and Barry Malone
KAMPALA, Nov 30 Uganda will in 2012 start the
phased development of an oil refinery that will initially meet
local demand of up to 25,000 barrels per day (bpd) before
scaling up to 200,000 bpd, an official said on Tuesday.
Keen on avoiding pitfalls that have bedeviled other
sub-Saharan African oil producers, east Africa's third biggest
economy has decided against exporting crude oil.
The government says it hopes refining capacity will
guarantee higher earnings, generate more employment and help the
country reach middle-income status.
The plant will match other planned refineries in South
Africa and Angola to be one of the largest in the region.
"The whole of next year we'll go into serious planning for
development," Fred Kabagame Kaliisa, permanent secretary at the
mines and energy ministry, told reporters.
"That will include getting land and sitting with financiers
and interested developers to tie into financing agreements."
Kabagame said the ministry and Uganda's cabinet were
discussing a feasibility study carried out by Foster Wheeler
FWLT.O. The refinery is to be based in Hoima in western
Uganda discovered commercial quantities of hydrocarbons in
the Lake Albert rift basin along its western border with the
Democratic Republic of Congo in 2006.
Exploration firms estimate reserves of up to 2.5 billion
"Between 2012 and 2016, the development of the refinery will
be phased," Kabagame said. "We'll start with limited production
to satisfy in-house market demand, then we'll go into bigger
production to satisfy the international market."
Kabagame estimated Ugandan demand at 20,000 to 25,000 bpd
and said the refinery would later refine for export, producing
Britain's Tullow Oil (TLW.L) -- the biggest explorer in
Uganda -- had initially said it would start commercial
production in the last quarter of 2011.
In recent months, however, the company suggested a tax
dispute between the government and Tullow's former partner,
Heritage Oil HOIL.L, could delay that target.
Kabagame also said on Tuesday that 28 companies -- including
several Chinese firms and Italy's Salini Costruttori -- have
expressed interest in building the planned $900 billion Karuma
hydropower dam, which will generate 700 megawatts.
A shortlist of eight firms will be issued in March of next
year. Companies will have until July to carry out on and
off-site reviews and submit their final bids.
"In August we'll award the winner because our aim is to see
that in September/October someone starts work," Kabagame said.
(Editing by James Macharia)