Speakers

Herbert Mugizi

Herbert Mugizi

Senior Petroleum Engineer

Directorate of Petroleum, Ministry of Energy and Mineral Development, Uganda.

Herbert M. Mugizi is a Senior Petroleum Engineer in the Petroleum Exploration, Development and Production Department of the Ministry of Energy and Mineral Development, Uganda. He has worked in the Energy industry for eight years. During this time he has been involved in the various aspects of the petroleum value chain especially in the upstream where he has worked on a number of Field Development Plans, Exploration Drilling, Well Testing, regulatory and policy work; and in the midstream particularly refining.  Herbert earned a BSc in Mechanical Engineering from Makerere University Kampala (Uganda), attained an MSc in Reservoir Evaluation and Management from Heriot Watt University (UK) and MSc in Energy, Trade and Finance (distinction) from the Cass Business School, City, University of London, (UK). Herbert participated in the evaluation of the feasibility of developing the oil refinery in Uganda where her role involved reviewing proposed designs and investment costs.


ABSTRACT

SESSION 15:  Completing the Monetization Cycle; The East African Oil Trading Hub

Oil contributes about a third of the total world primary needs and indeed is one of the key drivers of economic growth and development world over. Oil provides energy for power production, transport, industrial use, and mining etc. It is estimated that the world consumed about 95 million bopd in the year 2015 which was 1.9% increase from the year 2014. Africa is estimated to have consumed a paltry 4.2% of the total oil consumed in 2015 signifying an increase of 3.2% from the previous year 2014. On the production side, the world produced about 100 million bopd signifying an increase of 3.2% from the year 2014. It is also estimated that about 1 billion bopd are traded on the New York Mercantile Exchange (one of the major exchanges for the trade of crude oil).

Uganda plans to produce about 230,000 bopd in the year 2020 and it is also expected that Kenya will add an additional volumes. Uganda’s petroleum products consumption is estimated at 30,000 bopd and the East African region is consuming about 200,000 bopd. Both these figures are growing at between 4 – 6% p.a. It is projected that the region will consume about 400,000 bopd by 2030.

Uganda plans to construct a refinery that will initially have a throughput of 30,000 bopd in year 2020/21 which will be followed by an upgrade to 60,000 bopd by 2022/23 and finally 180,000 bopd which will be upgraded to 60K bopd by the year. From the figures, it is evident that the east African region will have to put some of the crude oil produced onto the international market and participate in it so as to ensure optimal commercialization or monetization of the resource to ensure a pay back on the investments made in this sub sector. However, little emphasis has been made on the peculiarity involved in turning this crude oil into money and it is usually assumed that once, at the cost, then it is automatic to sell. This is not as straightforward as it sounds especially for regions with no previous experience in oil trade.  There are no established trade route neither port facilities or infrastructure for crude oil trade in the region.
It is against this background that this paper will: assess and map the impact of planned Uganda/East African crude production and consumption on the world crude trade; assess the available pricing methods for the crude on the international market; assess the existing international trade routes and how the new East African production province may affect and contribute to their change. This will also look at the possible markets for the crude on the international market; look at the possibility of the Uganda National Oil Company participation in the various markets(Physical, forwards, futures and derivatives) and hedging methods available for the different players at the different time through the production life of the fields.