All Set For East African Oil And Gas Conference

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After many weeks of preparation, the first ever East African Oil & Gas Conference (EASOG) kicks off this Thursday, at the Kampala Serena Hotel. I am excited and looking forward to great deliberations.

The two-day EASOG is organised by the Stanbic Business Incubator, with support from Stanbic Bank Uganda, Uganda National Oil Company (UNOC), China National Offshore Oil Corporation and the Petroleum Authority of Uganda (PAU).

On top of exploring opportunities in the oil and gas sector, the conference will tackle challenges that may be standing in the way of the small and medium-sized enterprises (SMEs) targeting the oil and gas industry.

This will be an oil and gas conference like no other because its content has been curated to deal with the peculiarities of SMEs. For instance, if you are an SME looking for opportunities, there is an opportunity to get firsthand information from the international oil companies.

We have SMEs such as Gulf Cooperation Council and Atacama Consulting that have cracked servicing the oil sector and will be sharing their experiences.

Driving local content Since 2006, when Uganda discovered commercially viable oil reserves estimated at six billion barrels of oil, of which 1.4 billion is recoverable, SMEs have largely remained unaware of and unprepared for these opportunities.

For instance, of the $3.5b international oil companies spent in the exploration phase, local companies only got an estimated 28%. The majority of local businesses could not tap into these opportunities because of a variety of challenges.

From our close interaction with some of these businesses, some of these challenges included limited access to finance, poor health, safety, and environmental practices, inability to meet oil and gas industry standards.

But we cannot keep lamenting. The exploration phase is behind us and bigger opportunities are here. The April 11, 2021, signing of three major agreements for the East African Crude Oil Pipeline (EACOP) project kick started the development phase, which is already throwing up significant business opportunities.

The signing of these agreements, including the Host Government Agreement, the Shareholders Agreement, and the Tariff and Transportation Agreement for the EACOP — by Uganda, Tanzania, and their upstream partners, allowed the international oil companies to start awarding contracts to the main contractors for various major oil projects.

Our very own UNOC, which is mandated to hold 15% participating interest as the Government’s nominee in the petroleum production licences awarded, has also stepped on the lever.

UNOC is providing leadership on project stakeholder engagement, securing government pre- investment in some enabling infrastructure, providing technical expertise in upstream and refinery operations as well as national content leadership.

The conference’s other convenor and sponsor, the PAU, is also doing phenomenal work in terms of ensuring that some significant contracts are awarded to Ugandan companies.

PAU, which is also the oil sector regulator, has noted that the 2021 signing unlocked investment into Uganda’s economy, which includes the implementation of Tilenga Project (about $4b), the Kingfisher Project (about $1.5b) and the EACOP (about $3.6b).

This is in addition to the ongoing investment into the Hoima International Airport (over $500m) and 700km of oil roads (about $900m).

The PAU also notes that as a result, at the national level, Uganda’s GDP will be significantly boosted through sectoral linkages by close to $9b, a 22% increase of the current GDP, which is expected to reach $40.1b in 2020/21.

But most importantly, these developments portend immense opportunities for the SMEs. Already, contracts worth $167m out of the $1.362b for the Tilenga and Kingfisher projects will be awarded directly to Ugandan companies.

Overall, at least 28% or $4.2b of the $15b investment during the development and construction will go to Ugandan companies through provision of various goods, services and works.

It is important that local businesses tap into these opportunities because while revenues from taxation of the activities of international oil companies will be a major benefit from the oil industry, for Uganda to benefit from its oil and gas resources, the participation of local businesses is no doubt the most critical avenue.

That is why the Stanbic Business Incubator has over the last few years been training SMEs in a range of business skills to further bolster them and turn them into thriving and sustainable businesses.

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Beyond training in enterprise development, for SMEs to thrive in the oil and gas industry, they must recognize the need for more sustainable and environmentally friendly business models. They must learn to incorporate environmentalism and sustainability as core aspects of their business ventures.

They must appreciate that done right, environmental sustainability aligns profits with people and the planet.

The writer is the chief executive Stanbic Bank Business Incubator

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