High standards limit local participation in oil and gas

Oil and gas exploration
How can Uganda's Private Sector yield maximum benefits from Oil and Gas?. Courtesy Photo.

Local businesses are yet to provide supplies to the oil and gas sector as the country prepares to start production in 2020.

One major hurdle for would be local suppliers relates to standards yet the Oil companies in Uganda are not about to compromise with the requirements in the industry.

Uganda National Bureau of Standards (UNBS) recently developed new Oil and Gas standards to match those followed internationally. In addition to the government standards, oil companies are bound by International Association of Oil and Gas Producers (OGP) and the American Petroleum Institute (API) relating to supplies to the industry.

Some members of the Association of Uganda Oil and Gas Providers (AUGOS) have found that the standard requirements may lock out local manufacturers as well as citizens from the upcoming stage of oil production.

Patrick Kabahanga Mbonye, the Managing Director Q-Sourcing Limited, says many of the manufacturers need to adjust or fine-tune their production lines to suit required standards or lose out on the new opportunities.

Mbonye whose firm offers manpower management solutions in Uganda, Kenya, Rwanda and South Sudan, says there will be jobs in construction of the pipeline and refinery but the available human resource is not yet skilled for the tasks.

The three Joint Venture (JV) partners comprising CNOOC Uganda Limited, Total E&P Uganda and Tullow Uganda Operations Pty Ltd say they are ready to abide by the National Content requirements as per contracts signed, but those seeking to supply the industry or to be employed must abide by the standards.

Tony Okao Otoa, Total E&P National Content Leader, says the Oil and gas industry internationally emphasises standards and Ugandan suppliers must meet those standards.

The joint venture partners did carry out an extensive Industrial Baseline Survey (IBS) on the market as they move to the production stage.

This survey assessed the quantity and quality of goods and services that will be required for the project they are to undertake compared to the existing human and productive capacity of the Ugandan market.

It found that the Lake Albert Basin Development Project will create between 100,000 to 150,000 jobs through direct, indirect and induced employment. The study said there is likely to be a challenge in human resources regarding the number and level of certification of technicians to comply with oil and gas standards.

The oil companies have since developed a manpower database designed to assess future manpower needs, listing approximately 400 positions required to build and operate Lake Albert oilfields.

It concluded that some industries will be able to absorb project demands while many will need to enhance their capacity in terms of production volumes and standards.

The steel, cement, beverages, transport and logistics industries stand to benefit from the next stage of preparations towards oil production.

Industrial Baseline Survey finding is one available tool that those seeking to benefit from the jobs and supplies to oil and gas industry have to consult.

Mbonye, whose firm has begun training some Ugandans for the oil jobs, agrees with the study findings about the need to train more in the area of civil construction, electrical and mechanical fields.

Mbonye says the existing education institutions need to be more oriented on Oil and gas qualifications in order to match the industry requirements.

Elly Karuhanga, the Chairman of Uganda Chamber of Mines, while speaking at the recent Association of Uganda Oil and Gas Providers (AUGOS) conference, said many of the hospitality players could not compete on the standard requirements.

Uganda has proven reserves of oil estimated at 6.5 billion barrels with 1.8 billion barrels considered to be recoverable over the next 25 years.

– Uganda Radio Network