The Uganda National Oil Company (UNOC) is yet to find a buyer for the 45,211 barrels of test crude oil from extended well tests that it was tasked to market and sell.
At the beginning of this year, UNOC called for potential buyers to bid for the crude oil that is currently stored in specialized containers at four sites; Kasemene 1, Ngara-1, Ngiri-2 in Buliisa, and at Tangi Camp in Nwoya district.
The entry for the bids was supposed to close on March 9. However during a reporters’ field visit to one of the sites; Kasemene 1 in Buliisa district last week, it was revealed that UNOC has not received any potential buyer for its first sale of the oil.
Initially, the crude oil evacuated from the ground by Tullow Oil during this appraisal period would have simply been flared (burnt) into the air, however the government stopped this practice in the face of pressure from environmentalists who say flaring is detrimental to the environment.
According to the Chief Legal and Corporate Affairs officer UNOC, Peter Muliisa, all the bidders in the first bidding process failed to present satisfactory crude utilization plans, and demonstrating quality, health, safety and environment (QHSE) management measures.
“The problem was because with the kind of bidders we received, none of them presented satisfactory measures of utilizing this oil in a safe and healthy way. We would rather not sell the test crude instead of risking dangerous disposal of this crude oil. This is a very dangerous product. We need to be conscious of the whole process” Muliisa said in a phone interview.
He further revealed that in a period of two months, UNOC might have a potential buyer for the product as they have already shortlisted for possible bidders
“We announced the second bidding process and received a number of bidders. We shortlisted some of them and now we are looking at their logistics, environmental plan and the capability to consume this oil safely. In like two months or less, we should be able to announce the final buyer” he added
According to Sebikari Gloria, the Manager Corporate Affairs Petroleum Authority of Uganda (PAU) that had sponsored the field visits, the sale has been a difficult one because of technicalities involved in its consumption
“The possible buyers would be factories with heavy productions like the cement factories. However, to use this oil, they will also have to change the machinery that they are using which is a bit complicated at the moment,” she explained
At the moment crude oil is priced at $70 per barrel at the intercontinental Exchange. There have been previous attempts since 2012 to dispose of the crude oil, although they were not successful. National Oil Company Officials say this is because of technical reasons.
UNOC was incorporated in 2015 under the Companies Act by the Uganda Registration Services Bureau as a private company wholly owned by the government through the ministry of Energy and Mineral Development and The Ministry of Finance
The body is tasked with managing and marketing the country’s share of petroleum received in kind, in addition to other responsibilities as per the Petroleum Act, 2013.
If the sale materializes, it will be UNOC’s first major undertaking in Uganda’s oil sector.