UGANDA: Total, Eacop oil deal in high gear after call for bids

Ugandan players keen on a slice of oil and gas deals through local content provisions, with an estimated $8 billion to $10 billion worth of investment expected to flow into the country upon final signature is done

French oil major Total and its affiliate East African Crude Oil Pipeline (Eacop) have invited bids for various services, a sign that the long-awaited final investment decision (FID) oil deal that is expected to unlock $10 billion of investments, is around the corner.

The tenders target Uganda and Tanzania-based firms to compete across 10 categories of offers.

The Eacop route lies 80 percent in Tanzania, where Total is seeking bidders to provide commercial and office space for the pipeline company, on which the anticipated FID is premised.

Some tenders have closed but those invited last week, are open till March 19, and sources told The EastAfrican that “there is a lot of interest” from companies making “many inquiries about a number of issues.”

Association of Uganda Oil and Gas Service Providers (AUGOS) Chief Executive Emmanuel Mugarura, said the group’s members have been waiting for more than a decade for these oil and gas related opportunities.

Ugandan players are keen to get a piece of the oil and gas deals through local content provisions, with an estimated $8 billion to $10 billion worth of investment expected to flow into the country.

Window of opportunity

During the early stages of exploration, oil companies spent an estimated $3 billion, 28.3 percent of which remained in the country, according to Mr Mugarura.

With bigger money and opportunities to tap into as the country readies for oil production, AUGOS targets between 30 and 40 percent of the expected investment flows to remain in Uganda.

Elly Karuhanga, chairman of Uganda Chamber of Mines and Petroleum says the time for local companies to make money from oil and gas projects is the period between announcement of the final investment decision and when production starts.

“Between now and oil production, is when you will have all sorts of opportunities open up,” he says.

Total Chief Executive Patrick Pouyanne says Uganda project will have first oil in 2024, with FID confirmed this year, giving a three-year period of field development activity, which is the window of opportunity for local service providers, according to Mr Karuhanga.

“Thousands of experts, contractors, and others, will fly into Uganda to provide all kinds of services. They will need accommodation, food, transport… That’s the time for the local companies to make money. Once production starts, most of the activity is technical where Ugandans cannot compete,” he says.

Expected benefits

The tenders were invited both online and in print in the local media, and include rental of commercial and office space for Eacop in Tanzania, bank accounts opening and management both in Uganda and Tanzania.

Tanzania is the host country for Eacop and is expected to benefit from the company’s spending for office and commercial space rent over the 30-year period during which oil from Hoima in western Uganda will be transported through the pipeline to the Indian Ocean port of Tanga.

The preferred location for the rented property for Eacop office space is near the Masaki and or Oyster Bay neighbourhoods, and must have adequate parking facilities, life safety and security aspects including adequate means of fire and smoke protection, emergency evacuation and mustering space, secured entry with guards’ area, kitchen and hygiene facilities.

The tender invitation also adds that a mixture of private and shared offices and open plan workspaces will be considered, with meeting room facilities of various sizes.

Other tenders, mainly for Uganda-based companies are services for Buliisa camp maintenance and management, catering and hospitality, social relocation support.

Borrowing spree

Uganda’s oil project has stuttered for more than a decade, but this month, Total and Eacop called for expressions of interest for service providers across 10 categories of tenders, both in Uganda and Tanzania.

Players say this has brought optimism back into an industry where several entrepreneurs went on a borrowing spree to invest in construction of hotels, transport and logistics, heavy lifting equipment and air transport services, when Uganda announced first oil for 2015.

However, most business persons burnt their fingers as Uganda’s oil project faltered, missing several first oil targets and till now, it has failed to materialise.