What is UNOC?
UNOC stands for Uganda National Oil Company (UNOC) Limited. The Company was established under the Petroleum (Exploration, Development and Production) Act and the Petroleum (refining, Conversion, Transmission and Midstream Storage) Act, both of 2013. It was incorporated in June 2015 under the Companies act (2012) as limited liability company.
What is/are the role/s of UNOC?
Our key roles and responsibilities are derived from the mandates stipulated under the Petroleum (Exploration, Development and Production) Act and the Petroleum (refining, Conversion, Transmission and Midstream Storage) Act both of 2013.
The mandates of UNOC are:
1. Handle the state’s commercial interests in the petroleum sub-sector;
2. Manage State participation in petroleum activities;
3. Manage the marketing of the country’s share of petroleum received in kind;
4. Manage the business aspects of state participation;
5. Develop in depth expertise in the oil and gas sector;
6. Optimise value to its shareholders;
7. Participate in joint venture in which it holds an interest on behalf of the State;
8. Participate in meetings of the operating committees in furtherance of its participation in the respective Joint Operating Agreements; and
9. Investigate and propose new upstream, midstream and downstream ventures initially locally but later internationally
In summary, the overall function of UNOC is to handle the State’s Commercial interests in the Oil and Gas sector and ensure that the resource is exploited in a sustainable manner.
What are some of the achievements the company has made so far in playing this role?
UNOC was incorporated in June 2015 under the Companies’ Act (2012) as a private limited company. Since then, a lot has been achieved:
1. Recruitment of Management Team
The Board of Directors was inaugurated on October 2015 and has subsequently recruited senior management. The recruitment of staff has also been done and will continue as human resource requirements are identified. The company is now fully operational.
2. Incorporation of UNOC Subsidiaries
Uganda Refinery Holding Company (URHC) Limited and the National Pipeline Company (NPC) Limited were incorporated and the respective General Managers recruited. UNOC, through URHC will hold participating interests in the Refinery and its Attendant Infrastructure on behalf of the Government of Uganda. The proposed 60,000 barrels per day (bopd) Refinery Project will be based in Kabaale Parish, Buseruka Sub-County in Hoima District. UNOC plans to hold up to 40% stake in the Refinery Project.
UNOC will also develop, manage and operate the planned Kabaale Industrial Park (KIP). The 29.57 Sq. Km of land to host the refinery and an international airport, petrochemical industries and energy-based industries among other supporting infrastructure has been acquired in Hoima.
UNOC, though, NPC(U) Ltd will hold participating interest of up to 15% in the 1445 Km East African Crude Oil Pipeline (EACOP) on behalf of the Government of Uganda, which is the longest underground heated pipeline in the world. UNOC, through NPC (U) Ltd is also responsible for the operations and management of the Jinja Storage Terminal (JST) as well as the development of the planned Kampala Storage Terminal (KST).
3. Joint Operating Agreement (JOA)
As provided for in the current PSAs as well as the law, UNOC started and is engaged in the process of backing into the existing Production Sharing Agreements (PSAs) and Joint-Operating Agreements (JOAs). This process is expected to be concluded soon.
4. The Inter-Governmental Agreements (IGA) and Host-Governmental Agreements (HGAs)
UNOC was part of the negotiations leading to signing of the Inter-Governmental Agreements (IGA) between Government of Uganda and the Government of United Republic of Tanzania. The IGA was signed in May 26th 2017 to facilitate the development of the East African Crude Oil Pipeline (EACOP) Project. UNOC is also part of the Host-Government Agreements (HGAs), Shareholders Agreement, Crude Transportation Agreements among others to facilitate the development of EACOP Project. The negotiations of these agreements are expected to be concluded soon.
5. Staff Recruitment
In order to deliver the mandate, UNOC embarked on the process of filling key positions within its structure. To date the company employs about 40 staff with a wide range of experience. The team possesses a mix of local and international industry experience in business development; exploration and production; oil and gas transportation; refining; and project management among others. This mix is important to our business as a privately State-owned company.
6. Policies, Procedures and Guidelines
Policies and procedures for the efficient and effective running of the entity have been put in place. The initial ones put in place are to streamline governance, accountability, risk management, joint venture participation, planning, staff management, investment and Communication & Stakeholder Engagement.
7. Management of Jinja Storage Terminal (JST)
UNOC was handed the Jinja Storage Terminal (JST)to ensure reliable stocking and management of petroleum products of the Government Strategic Reserves. UNOC took over the facility at the end of May 2017 and working in a joint venture with a strategic partner, One Petroleum Consortium, has refurbished and restocked the facility to the requirements of international standards. The benefit for the Country created here is that strategic reserves are maintained to help in periods of disruption and in addition UNOC will be earning revenue from commercial operations at the Facility. It is worthy to note that because of this intervention, the recent Kenyan Election cycle didn’t affect pump prices in Uganda.
8. First oil in fast track mode with ambitious timelines
UNOC is closely working with stakeholders at all levels, across all critical areas such as Infrastructure and logistics, land acquisition, environmental and social impact assessments, water extraction and excess gas utilisation to ensure this important government target is achieved.
9. First Annual General Meeting
UNOC held its First Annual General Meeting (AGM) on November 15th 2017. Shareholders were briefed about the state of the Company and its business operations and key resolutions for the activities of the company in the next year were made.
What are your key priorities for 2018?
UNOC is concluding the backing-in process to enable it manage the 15% State participation interest and other Government commercial interests in the Kingfisher Development Area (Hoima) and Tilenga Development Projects (Buliisa & Nwoya) on behalf of the State. UNOC plans to embark on exploration and new ventures to optimise product ion sustainability and is in the process of analyzing data acquired from the Petroleum Authority of Uganda (PAU) for identified prospects in the Albertine Graben. UNOC intends to proceed with exploration in partnership with a potential joint venture partner or a consortium of them as soon as data analysis is concluded.
UNOC has put in place plans to manage the participating interests of the State in both the East African Crude Oil Pipeline (EACOP) and the Refinery Projects. UNOC plans to hold 15% interest in EACOP and 40% in the Refinery Project. The said participating interests shall be held through UNOC’s wholly owned subsidiaries, National Pipeline Company (NPC) Uganda Limited and Uganda Refinery Holding Company (URHC) Limited respectively.
UNOC is also looking at managing and operating the Kabaale petro-chemical Industrial Park that will sit on the 29.59 square kilometer piece of land acquired in Hoima and that will among others host the Refinery and petro-chemical industries.
UNOC is focusing on two projects: the Kampala Storage Terminal, and the management of Jinja Storage Terminal (JST). UNOC intends to develop, build and operate the multi-user petroleum refined products storage terminal near Kampala through a joint venture. UNOC has been managing the Jinja Storage Terminal since end of May 2017 and plans to include use of barge transport over Lake Victoria to ease transportation of petroleum products to the terminal.
In what areas are there setbacks, delays for the company in playing its role in the sector?
UNOC has received 100% support from all key stakeholders. We also recognize our stakeholders and partners who have been part of our success. No setbacks registered so far.
What is company doing to facilitate the transfer of technology and business practices to local companies and also support the growth of domestic industry?
UNOC is working on a local content program with key stakeholders to ensure individuals and local companies are trained, equipped and empowered to access business opportunities in the oil and gas industry. Local Content is at the centre of our business operations and projects.
With inadequate funds from government how will the company play its role in exploration and various investment programs requiring large capital or funds?
Government is looking at different ways to provide seed capital to UNOC to enable it participate in different projects that require funding. The plan is to ensure that UNOC is financially self-sustaining in the medium and long term.
In relation to existing Production Sharing Agreements (PSAs), the participating interest of UNOC is carried by the International Oil Companies. UNOC will however be required to answer its cash calls at when the carry period ends. We are working with the Government to ensure that a financing plan is in place before these obligations become due.
How capable is the company investing in the activities of oil and gas industry and the various activities taking place?
UNOC has recruited people with experience and expertise in the oil and gas sector and as such is able to competently participate and invest in oil and gas activities. We are working closely with National Oil Companies from Africa and across the globe to share lessons, opportunities and challenges. UNOC also works through strategic partnerships to ensure economic and commercial risks are distributed efficiently.
How are you ensuring that the company does not pose a risk and not create value for Uganda from examples from various similar companies seen worldwide?
UNOC is ensuring that it adheres to high levels of corporate governance, operates with transparency and involves all stakeholders in a timely fashion. We also have instituted policies and procedures to efficiently identify and manage risks. We plan to ensure that all our investments achieve shareholder value and we aim at ensuring that Ugandans are enabled to participate in our operations.