October 8, 2013 / 1:00 PM / 4 years ago

UPDATE 1-Uganda says many firms interested in $2.5 bln refinery project

* Refinery project opening up for expressions of interest -minister

* Says talked to 15 companies including Sinopec about refinery

* Says production licences for Tullow, Total could come this month

By Sarah Young and Elias Biryabarema

KAMPALA/LONDON, Oct 8 (Reuters) - Uganda said over a dozen companies were interested in investing in a $2.5 billion refinery project and it would soon issue two further production licences, helping the country move closer to pumping reserves discovered seven years ago.

Uganda hopes to become a significant oil producer after Tullow Oil found oil in the Albertine rift basin along the border with the Democratic Republic of Congo.

The country’s junior minister of energy and mineral development said the government was opening up the refinery project for expressions of interest on Wednesday, and added that Tullow and France’s Total could be awarded production licences some time this month.

“As they (Tullow and Total) fulfil all the requirements, we shall sign the production licences for them,” Peter Lokeris told reporters on the sidelines of a conference on Tuesday.

China’s CNOOC in September received the first production licence, giving it a green light for a $2 billion plan over four years to develop the Kingfisher oil field.

The minister said he was also confident on securing investment for its 30,000 barrel per day refinery, saying there were “many” companies interested in the project.

“We have discussed with some 15 companies, different companies worldwide,” he said, naming Chinese refiner Sinopec and an Australian company as amongst those interested.

Egyptian private equity firm Citadel Capital has expressed interest in the project in the past.

Wrangling over taxes and the viability of the local refinery have in the past threatened to stall the development of Uganda’s estimated 3.5 billion barrels of reserves, with commercial production expected to start in four years’ time.

Robert Kasande, a senior official at the country’s ministry of energy, told Reuters in a separate interview on Tuesday that investors in the refinery will take a 60 percent stake and the government will hold the rest.

East African neighbours such as Kenya have been offered 10 percent of the project, to be taken from the government’s share, Kasande added.

“We are looking for somebody with prior experience and technical expertise in investing in a refinery,” said Kasande.

Interested firms will have a month to submit their bids, he said, with winners being selected by April next year.

“Our estimate is that by 2017-2018 the refinery should be ready and that time is in line with the first production licence that we’ve just handed out,” Kasande said.

Uganda agreed earlier to a plan to build a pipeline from its oilfields to a new port being developed on Kenya’s northern coast to pump extra crude that will not be processed locally.

Minister Lokeris said South Sudan was involved in the talks about the pipeline. The country wants a new export route for its crude as it currently relies on a pipeline through its northern neighbour Sudan, and rows between the two have disrupted flows.

“Southern Sudan is discussing with Kenya that they also want part of their oil to pass through Kenya. We are all part of it, we discuss it together,” he said, declining to give details on financing and costs for the project.

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