Oil Sector Reform in Uganda

The Ugandan government plans to entrust exclusive rights for the supply of petroleum products to a subsidiary of the global energy trader Vitol, putting an end to a system that used to involve neighboring Kenya for the import of these products.

Share:

ouganda transition énergie

Uganda, a landlocked East African country, is planning a radical change in the way it sources its petroleum products. Energy Minister Ruth Nankabirwa has announced that the country plans to give Vitol, a global energy trading company, exclusive rights to supply petroleum products, thus ending the current system that passes through neighboring Kenya.

Current system problems

Currently, fuel distribution companies in Uganda purchase their products via affiliated companies in Kenya, who import the fuel on their behalf via the port of Mombasa. This system, which accounts for 90% of Uganda’s fuel imports, exposes the country to supply interruptions and high prices at the pump, according to the Minister of Energy.

Ruth Nankabirwa said in a statement, “UNOC and Vitol Bahrain E.C. have negotiated a five-year contract, and the partner (Vitol) will finance the venture by providing working capital.” According to Central Bank data, Uganda imported $1.6 billion worth of petroleum products in 2022.

Legal changes and outlook

The Ugandan government has approved amendments to the Petroleum Act that will allow Vitol to supply exclusively to the state-owned Uganda National Oil Company (UNOC). UNOC will then sell the products to service station operators. To guarantee security of supply in Uganda, Vitol and UNOC will establish “buffer stocks” in Uganda and neighboring Tanzania, added Nankabirwa.

The legal amendments that will strengthen the agreement were presented to Parliament on Tuesday for approval, the minister said, without specifying a date for the parliamentary vote. A spokesman for the Ministry of Energy said that Vitol and UNOC had already signed the contract, and that the first exclusive deliveries to the state-owned company were scheduled for January.

The use of Kenyan importers had “exposed Uganda to occasional supply vulnerabilities, with Ugandan distribution companies considered secondary in the event of supply disruptions, impacting consumer prices”, said Nankabirwa.

In March, Kenya signed an agreement with Saudi Aramco, Abu Dhabi National Oil Company and Emirates National Oil Company, moving from an open tender system where local companies bid to import oil each month. Kenya’s Petroleum and Energy Regulatory Authority did not immediately comment on Uganda’s proposed changes.

Prospects for a Reformed Oil Sector

The reform of Uganda’s petroleum product supply is designed to guarantee a stable supply of fuel, while reducing dependence on imports from Kenya. This initiative will have repercussions for the country’s oil sector and could influence regional energy dynamics.

Uganda’s decision to award Vitol exclusive rights to supply petroleum products marks a major turning point in the country’s energy sector. While the legal changes are being approved, the Ugandan oil industry is gearing up for a reform that could have significant implications for fuel supply and consumer prices in the country.

The private OCP pipeline has resumed operations in Ecuador following an interruption caused by heavy rains, while the main SOTE pipeline remains shut down, continuing to impact oil exports from the South American country.
McDermott secures contract worth up to $50 million with BRAVA Energia to install subsea equipment on the Papa-Terra and Atlanta oil fields off the Brazilian coast.
Saudi Aramco increases its oil prices for Asia beyond initial expectations, reflecting strategic adjustments related to OPEC+ production and regional geopolitical uncertainties, with potential implications for Asian markets.
A bulk carrier operated by a Greek company sailing under a Liberian flag suffered a coordinated attack involving small arms and explosive drones, prompting an Israeli military response against Yemen's Houthis.
The Canadian government is now awaiting a concrete private-sector proposal to develop a new oil pipeline connecting Alberta to the Pacific coast, following recent legislation intended to expedite energy projects.
Petrobras is exploring various strategies for its Polo Bahia oil hub, including potentially selling it, as current profitability is challenged by oil prices around $65 per barrel.
Brazilian producer Azevedo & Travassos will issue new shares to buy Petro-Victory and its forty-nine concessions, consolidating its onshore presence while taking on net debt of about USD39.5mn.
Major oil producers accelerate their return to the market, raising their August quotas more sharply than initially expected, prompting questions about future market balances.
Lindsey refinery could halt operations within three weeks due to limited crude oil reserves, according to a recent analysis by energy consultancy Wood Mackenzie, highlighting an immediate slowdown in production.
The flow of crude between the Hamada field and the Zawiya refinery has resumed after emergency repairs, illustrating the mounting pressure on Libya’s ageing pipeline network that threatens the stability of domestic supply.
Libreville is intensifying the promotion of deep-water blocks, still seventy-two % unexplored, to offset the two hundred thousand barrels-per-day production drop recorded last year, according to GlobalData.
The African Export-Import Bank extends the Nigerian oil company’s facility, providing room to accelerate drilling and modernisation by 2029 as international lenders scale back hydrocarbon exposure.
Petronas begins a three-well exploratory drilling campaign offshore Suriname, deploying a Noble rig after securing an environmental permit and closely collaborating with state-owned company Staatsolie.
Swiss commodities trader Glencore has initiated discussions with the British government regarding its supply contract with the Lindsey refinery, placed under insolvency this week, threatening hundreds of jobs and the UK's energy security.
Facing an under-equipped downstream sector, Mauritania partners with Sonatrach to create a joint venture aiming to structure petroleum products distribution and reduce import dependency, without yet disclosing specific investments.
Dalinar Energy, a subsidiary of Gold Reserve, receives official recommendation from a US court to acquire PDV Holdings, the parent company of refiner Citgo Petroleum, with a $7.38bn bid, despite a higher competing offer from Vitol.
Oil companies may reduce their exploration and production budgets in 2025, driven by geopolitical tensions and financial caution, according to a new report by U.S. banking group JP Morgan.
Commercial oil inventories in the United States rose unexpectedly last week, mainly driven by a sharp decline in exports and a significant increase in imports, according to the US Energy Information Administration.
TotalEnergies acquires a 25% stake in Block 53 offshore Suriname, joining APA and Petronas after an agreement with Moeve, thereby consolidating its expansion strategy in the region.
British company Prax Group has filed for insolvency, putting hundreds of jobs at its Lindsey oil site at risk, according to Sky News.