Uganda’s emerging oil and gas sector is reaching a pivotal new phase, marked by a landmark agreement between the Uganda National Oil Company (UNOC) and Vivo Energy Uganda Limited. This strategic partnership, formally signed at UNOC’s head office in Kampala today, is set to revolutionise Uganda’s domestic energy landscape by facilitating the development, storage, and distribution of Liquefied Petroleum Gas (LPG) from the nation’s flagship Tilenga and Kingfisher oil projects.
The partnership was signed by a team from UNOC led by Ms. Proscovia Nabbanja, the Chief Executive Officer (CEO), and Ms. Joanita Mukasa Menya, the Managing Director, Vivo Energy Uganda, who was flanked by the company CEO, Nimit Shah. This move is a critical step towards achieving a cleaner, healthier, and more sustainable energy future for Ugandans.
Uganda’s current annual LPG consumption stands at a modest 25,000 tonnes, with a per capita usage of just 1.2 kilograms.
This figure varies in comparison to regional and global averages, highlighting a reliance on traditional biomass fuels like firewood and charcoal, which account for over 90% of household energy use and contribute significantly to deforestation, indoor air pollution, and respiratory illnesses. This new agreement thus aims to decisively shift this paradigm.
From Crude to Clean Cooking
The Tilenga and Kingfisher oil projects, while primarily focused on crude oil production, will also yield significant volumes of associated gas.
This gas, previously an underutilised byproduct, is now strategically earmarked for conversion into LPG.
The partnership between UNOC, representing the government’s interests in the petroleum value chain, and Vivo Energy, a leading energy distributor with extensive market reach, creates a robust framework to monetise this resource for domestic benefit.
Benefits to the Oil and Gas Sector
The key impacts of this milestone agreement on Uganda’s oil and gas sector include:
Cleaner Cooking Solutions for Millions
By increasing the availability and accessibility of LPG, the partnership directly addresses Uganda’s clean cooking challenge.
This transition will dramatically reduce reliance on biomass, mitigating deforestation rates, improving household air quality, and consequently, enhancing public health, particularly for women and children.
The estimated LPG production from Kingfisher and Tilenga projects is projected at approximately 20,000 tonnes and 80,000 tonnes per year, respectively, leading to an anticipated total domestic supply of over 200,000 tonnes annually.
Robust Infrastructure Development
The agreement facilitates the development of crucial LPG storage and distribution infrastructure, likely at the Kabalega Industrial Park in Hoima, a strategic hub also designated for Uganda’s oil export facilities and an international airport.
This localised infrastructure will ensure a stable, secure, and affordable supply of LPG across the country, bridging the gap between upstream production and downstream consumption.
This massive investment, reportedly around Shs2.06 trillion (approximately USD550 million) committed by Vitol and Vivo Energy at the 2024 Summit on Clean Cooking in Africa, highlights the scale of this ambition.
Economic Growth and Job Creation
This venture is set to stimulate significant economic growth. The development of storage facilities, cylinder manufacturing, refilling stations, and expanded distribution networks will create numerous local jobs and strengthen national content, particularly in the oil-rich Albertine region. It fosters a new segment of the energy economy, attracting further private sector investment.
Integration of the Oil and Gas Value Chain
The partnership exemplifies UNOC’s overarching strategy to integrate upstream gas production with domestic consumption. It signals a move beyond merely extracting crude oil for export, showcasing a commitment to leveraging hydrocarbon resources for direct socio-economic benefits within Uganda.
Positioning Uganda as a Regional Energy Player
While the immediate focus is on domestic uptake, the anticipated surplus LPG production positions Uganda as a potential exporter of clean energy solutions to neighbouring countries. This could establish Uganda as a regional energy hub, diversifying its energy exports and contributing to regional energy security and transition goals.
The collaboration between UNOC and Vivo Energy Uganda is a testament to the nation’s proactive approach to energy transition.
It demonstrates a clear vision to leverage its oil and gas wealth not just for revenue generation, but for direct improvements in the quality of life for its citizens and a leadership role in Africa’s shift towards cleaner, more sustainable energy sources.