Uganda has taken a significant step forward in developing its long-awaited first crude oil refinery by signing an agreement with UAE-based Alpha MBM Investments LLC. The refinery, to be built in Kabaale, Buseruka Sub-County in Hoima District, is part of the country’s broader strategy to enhance its oil processing capabilities and reduce reliance on imported petroleum products.
The agreement, finalized on March 31 between Uganda’s Ministry of Energy and Mineral Development, the Uganda National Oil Company (UNOC), and Alpha MBM Investments, paves the way for the design, construction, and operation of the 60,000-barrel-per-day (b/d) refinery. According to UNOC, the project is expected to take three years to complete. Once operational, it will be East Africa’s first major crude oil processing plant, catering to both domestic and regional fuel demands.
Background and Project Details
Previously, Uganda had signed a project framework agreement with the Albertine Graben Refinery Consortium (AGRC), which included partners such as YAATRA Africa LLC, Lionworks Group Ltd., Baker Hughes General Electric’s Italian subsidiary Nuovo Pignone International SRL, and Saipem SPA of Italy. Under this agreement, Saipem was responsible for front-end engineering design (FEED) and engineering, procurement, and construction (EPC) activities.
By 2019, the government had approved the final configuration study, which determined that the refinery should be a residue fluid catalytic cracking-type plant. The FEED was completed in 2021. However, after the original framework agreement expired in June 2023, UNOC confirmed that Alpha MBM Investments signed a memorandum of understanding in December 2023 to take over as the lead partner on the project.
In addition to the refinery, the broader project will include:
- A 211-km multi-product pipeline transporting refined products to a storage terminal in Namwabula, Mpigi District.
- The Mbegu Water Intake and a water pipeline infrastructure to supply the refinery.
- A storage terminal in Namwabula to hold finished petroleum products.
The refinery is a crucial component of Uganda’s long-term plan to commercialize its oil and gas resources through both refining and pipeline projects.
Progress on the East African Crude Oil Pipeline (EACOP)
The agreement for the refinery follows a major financial milestone for the East African Crude Oil Pipeline (EACOP) project. On March 26, EACOP Co. Ltd. announced the closure of the first tranche of external financing from a consortium of financial institutions. The 246,000-b/d pipeline will span 1,443 km, transporting crude oil from Kabaale in Uganda’s Hoima District to the Port of Tanga in Tanzania for export.
Institutions financing the pipeline include the African Export-Import Bank (Afreximbank), Standard Bank of South Africa Ltd., Stanbic Bank Uganda Ltd., KCB Bank Uganda, and the Islamic Corporation for the Development of the Private Sector (ICD).
Construction is already well underway, with over 50% completed as of the end of 2024. The pipeline will feature 296 km of infrastructure in Uganda and 1,147 km in Tanzania, along with six pumping stations, two pressure-reduction stations, and a marine export terminal in Tanzania. The terminal will also include a 3 MW peak solar plant, which will be integrated into national hydro-based power grids.
Established in 2022 specifically to oversee the pipeline’s construction, East African Crude Oil Pipeline Co. Ltd. consists of TotalEnergies SE (62%), UNOC (15%), China National Offshore Oil Corp. (CNOOC) Uganda (8%), and Tanzania Petroleum Development Corp. (TPDC) (15%).
These developments mark significant progress in Uganda’s energy sector, positioning the country as a key player in East Africa’s oil and gas industry.