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It’s Korea Vs Russia; Race for refinery investor down to two

Analysis

It’s Korea Vs Russia; Race for refinery investor down to two

SK Energy’s refinery in South Korea

The race for a lead investor into Uganda’s first oil refinery moved into a new critical phaze recently following the selection of two major world players who must now battle it out for Uganda’s single biggest and perhaps most lucrative deal.

According to the Ministry of Energy website, 000 barrels per day by 2017.

SK group, a consortium from South Korea that brings together SK Energy and Hyundai, owns the world’s second largest refinery in the World of 1.12 million barrels per day.

On the other hand, RT Global resources and its consortium members have developed key refining projects in Russia.

Kaliisa says that the best and final offers are expected to come by the end of 2014.

The refinery project however faces a major obstacle because the production companies want to export the crude via a pipeline going through Kenya but which is yet to be built.

Because of its importance to the development of a country, construction of a refinery in Uganda has been a business issue as well as political one for Uganda. There have even been attempts by some circles to suggest that Uganda’s oil deposit are so small that investing in a refinery would not make economic sense for Uganda.

But Ugandan leaders have commissioned a study that found that the available reserves are enough for the construction of a small refinery starting with 60,000 bpd and later increase the capacity to about three times more.

Opponents of a refinery, who include the existing licensed oil exploration companies like Total and CNOOC, have suggested building a pipeline.

The government has taken a careful approach in pursuing the refinery option but it should not be lost on many that political considerations are likely to weigh in heavily while choosing the final bidder.

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