Russian oil looks to Africa: Rostec bids for first $3bn Uganda refinery

Russian oil looks to Africa: Rostec bids for first $3bn Uganda refinery
In a tender involving global giants such as Total and China National Offshore Oil Corporation (CNOOC), Russian Rostec wants to set up the first oil refinery in the fast growing market of Uganda, one of the most business-friendly places in Eastern Africa.

The subsidiary of  Russian state corporation Rostec - RT – Global Resources -  will partner the VTB Capital, while Tatneft will take over the operational role.  

Preliminary estimates suggest the cost of the country's first oil refinery to be built in the city of Hoima will be around $3 billion, the Izvestia paper reports.

The Ugandan oil market is growing 10 percent annually. It’s one of the most politically-stable countries in Eastern Africa, with not local conflicts or warring neighbors, the paper quotes Karen Simonyan, the President of the Russian-African fund to support science, culture and business cooperation. Production from the refinery will go both to internal and external markets, which don’t have any refineries. Because the country is landlocked the oil products will carry a premium. 

According to the tender 40 percent of financing will be provided by Uganda, while the company that wins will be responsible for the remaining 60 percent. More than 50 international bidders are interested in developing the refinery. The results of the tender will be announced in 2014, while construction process will commence in 2015, according to Daily Monitor.

New exploration will also take place at Alberta Lake that has estimated reserves from 6 to 8 million barrels of oil. The refinery is expected to provide 1.5 million tonnes of products a year by 2017, which will almost completely cover Ugandan needs. By 2020 production at he plant is expected to double.

Investment from Russia will be less than $1 billion, according to Andrey Korobov, the General Director of RT – Global Resources,Izvestiya reports. The consortium aims to recoup the money spent on the project in a short time due to the high oil price.

Rostec considered 25 companies as major rivals, including those from the UK, US and China. The main criterion for Uganda is the construction time. Ugandan representatives have only visited Russia to talk anout the proposed agreement.