How Uganda’s Waxy Oil Has Reshaped The Course of Production
Uganda’s race towards first oil is a tale of anticipation, targets and revised deadlines. To some, it’s annoying that the prior oil production target, 2025, won’t be met. While the inherently complex and capital-intensive industry seems unrushed, there is great progress within. At the Tilenga project, operated by TotalEnergies EP Uganda (TEPU), Kingfisher, operated by China National Offshore Oil Corporation Uganda Ltd (CNOOC), Kabaale Industrial Park and the East African Crude Oil Pipeline (EACOP). Largely, everything needed for production is expected to be in place by the end of 2025 for both Tilenga and Kingfisher. Commercial production can be expected perhaps in the financial year 2026-2027, or the year after considering EACOP’s early 2026 readiness. The apparent ground work and progress exhibits an African oil journey shaped by dynamic global trade winds but in this case, a waxy crude oil journey.
Progress at a glance
Oil drilling is progressing at both Tilenga and Kingfisher through directional drilling. For the latter, CNOOC is tapping into the offshore oil wells in Lake Albert. Of the 31 wells to be drilled on 4 well pads at Kingfisher, 12 are done. Construction is underway at the 40,000 barrels per day central processing facility (CPF) in Kikuube.
“Our target is June 2025. We shall be ready but we need to wait for the EACOP infrastructure.” Joseph Omaswa, CNOOC’s Communications Engineer said during the recent visit to the Albertine graben.
At the 190,000-bpd project, Tilenga, in rural Buliisa district and Nwoya, civil works are ongoing at the Industrial area which will house the central processing facility. Drilling at Ngiri 1 and Ngiri 3 well pads is complete. At Gunya 4 well pad and Jobi-Rii in Murchison Falls National Park, drilling is underway and the next stop will be Kasemene-Wairindi. Apparently, 76 out of the 426 wells have so far been drilled. 6 well pads and 98 wells are expected to be complete by the end of the year. The CPF is at the EPSCC stage (Engineering, Procurement, Supply, Construction and commissioning). With the engineering phase already complete, construction is underway and commissioning will be determined along the way.
“Generally, the target is that all the necessary infrastructure for production should be in place by the end of next year,” Anita Kayongo, the Corporate Affairs Manager, TotalEnergies EP Uganda affirms. “Not just the industrial area and CPF, but all facilities including the well pads and feeder lines.” She adds.
For EACOP, the first batch of pipes already made landfall to expedite the 1,443km pipeline. Welding and stringing are being done. Of the 296kms in Uganda, 70kms have so far been worked on. Effective December, 100kms per month will be worked on in both Uganda and Tanzania. According to Stella Amony, the project’s Communications Lead, stringing is being done at Pump Station 1 in Kabaale, Hoima, part of Kabaale Indsutrial Park, the delivery point of crude to the refinery and EACOP. Similar pipe works are ongoing at the Tilenga feeder line. The project readiness is tagged at early 2026.
The waxy oil & precautionary road ahead
In case Uganda’s crude was categorically light, chances are high that EACOP and the industry at large wouldn’t have taken the current direction. At surface temperature, the oil takes on a solid state almost similar to shoe polish.
“At below 50 degrees Celsius, it barely flows because of the waxy nature. Our pipeline has got a heating tube that keeps the crude oil at 68 degrees Celsius.” Joseph Omaswa, CNOOC’s Communications Engineer describes the relation between the crude and transit.
Unlike light crude which is easier to process, refine, and more valuable, waxy crude oil has unique characteristics and challenges. High amounts of long-chain paraffin wax mean a high pour point and low API gravity (American Petroleum Institute standard measurement of the density of petroleum liquids compared to water). Poor liquidity at temperature reduction and static cooling implies a gelation effect. Unfortunately, the transition into solid state is unwanted in the oil industry as it would subsequently cause a pipeline shutdown that further shifts into an economic and environmental disaster. While this particular explanation may not be the exact cause of dissent towards EACOP from environmentalists such as Uganda’s Hilda Nakabuye and her Fridays for Future movement, or Tanzania’s Kassimu Ziadah, from an ecological perspective, the pipeline’s footprint is.
Although EACOP, at 1,443km barely ranks among the longest crude oil pipelines such as ESPOOP (Eastern Siberia-Pacific Ocean Oil Pipeline) at 4,853km, and Druzhba, 4,000km, it will nevertheless be the longest heated pipeline. This corresponds with the thick nature of oil to be moved to Tanga for access to the international market. Good enough, the pipes have been sourced from China. The Asian country is one of the biggest producers of waxy oil and its expertise in thermal engineering has been a perfect solution for even its ventures such as the China West Crude Oil Pipeline.
The 24-inch carbon steel pipeline is being fitted with the state-of-the art technology to facilitate seamless oil flow, fast track and abate potential emergencies and oil spill disasters. 33KV power cable, 82 block valves, fibre optic cables for monitoring and transmitting real time data. 20 heating substations, 5 in Uganda and 15 in Tanzania.
What’s there to know about the contentious oil production timeline?
Giant oil fields in notable countries such as Norway have required 11 years between discovery to first production. 13 years for the small oil fields and collectively, 12 years for both giant and small fields. From a global perspective, on average, it would take 6 years between discovery and first production under a business as usual scenario. A closer look at Uganda’s oil development offers relative insight. Both TotalEnergies and CNOOC started preliminary works in 2012 and 2013 respectively.
Going through the ranks from well discovery and appraisal to the developments on access roads, well pads, industrial area, central processing facility, among others. The apparent goal is first oil, which will then draw momentum for build-up, plateau, decline, and eventually abandonment when the economic limit of the projects sets in about 25 years from the start of production. Whether commercial oil is achieved in 2026 or 2027, or a year after as opposed to the prior target, 2025, at least there are clear signs and market dynamics have a role to play.
For first oil, all wells don’t require to be drilled at once. CNOOC needs 12 out of the 31 wells, a target that has been achieved. As for TEPU, about 120 out of the 426 wells are needed. 98 will have been drilled by the fall of this year.
“For us to start oil production, we don’t need to have all the 31 wells drilled and completed.” Gloria Sebikari, the Corporate Affairs Manager, Petroleum Authority of Uganda informs about Kingfisher’s progress.
EACOP anticipates to be ready early 2026. Ultimately, fast tracking whatever timeline is in sight will depend on swift completion of project works beyond well pad drilling to include the industrial area, central processing facilities, the 16-18km of in-field flow lines to the CPF at Kingfisher and 160km for Tilenga.
EACOP, TotalEnergies & CNOOC sandwiched in the fossil fuel dissent
Apparently, global commitment is on the energy transition considering the impact of climate change as evidenced at the just concluded climate summit, COP29 in Baku, Azerbaijan. This means growing need for investment in renewable energy amidst demand to defund the oil and gas industry as efforts to clean up energy systems intensifies. By the end of this year, investment in clean energy – hydro, solar and wind for instance, is expected to exceed $2 trillion and the goal is to triple global funding in renewable energy.
Locally, anti-oil and gas movements such as Fridays for Future Uganda and StopEACOP have been active enough to illustrate their bitterness about oil projects such as EACOP. CNOOC and TEPU haven’t been spared of the beating, sustaining occasional demonstrations. The message has been global and undivided, seeking outright defunding of the sector.
The Tilenga project capital expenditure is between UGX14.7 trillion to UGX22.1trn. UGX7.4trn to UGX11.1trn for Kingfisher, and UGX18.5tn for EACOP. Putting in mind the anger and demand to cut further investment in fossil fuels, debt financing and other streams necessary for the much-needed capital inflow are constrained. The impact ultimately ripples down to the project progress. Take EACOP for example. Its funding comes from streams of both equity and debt financing.
“There is a big no for this project worldwide. Many bankers under the pressure of environmentalists and may be behind the scene, politics, are against the project.” Hadi Watfa, the Manager, Above Ground Installations, EACOP, observes.
The World Bank’s private sector arm, the International Finance Corporation (IFC) is currently under pressure to exclude coal, oil and gas from its trade finance product line. In 2022, an estimated $3.7bn went to global oil and gas projects. As pressure mounts on financial institutions including the World Bank, pushing them towards compliance with the Paris Agreement which sets tone for climate action, worry looms over free flow of oil finance. According to highradius, as of 2023, the oil and gas industry had a total debt of $55 billion and major companies such as Saudi Aramco, Shell PLC, PetroChina, Chevron and TotalEnergies benefitted from debt financing, 82% of the debt being long-term.
Despite the Oil and Gas Methane Partnership 2.0, which brings together some of the world’s biggest oil companies including TotalEnergies committing itself to a framework on cutting methane emissions, it doesn’t hold high regard among different sections. Its non-company membership further includes the World Bank which is castigated for using the back door to finance the oil industry.
Leaving no stone unturned
The Petroleum Authority of Uganda, tasked with sector regulation, the Ministry of Energy and Mineral Development, responsible for policy formulation, together with the industry stakeholders are not ready to leave any stone unturned. Policies such as the National Oil Spill Contingency Plan, Uganda Energy Transition Plan, and other green manufacturing policies and regulations have set the pace for sustainable resource use. At both Tilenga and Kingfisher, directional drilling has been integrated to minimize the project’s carbon footprint. This has in turn concentrated Kingfisher’s 31 wells on just 4 well pads and Tilenga’s 426 wells on 31 well pads. Just as the energy ministry considers methane mining at the troubled Kiteezi landfill, methane conversion will be done at both projects, generating electricity for both industrial use and to be fed onto the national grid. LPG will be produced to support clean cooking.
Silent rigs are being used in the drilling phase. The goal is to limit noise pollution which would otherwise disrupt wildlife in crucial ecosystems such as the country’s legendary national park, Murchison Falls, home to 10 well pads including Jobi-Rii. Additionally, restoration will be undertaken upon completion of drilling activities within Murchison and beyond.
On 30th August 2023, Uganda National Oil Company (UNOC), together with its partners launched the Alliance for Climate Resilience. Through climate action, the pact intends to plant 40 million trees countrywide within 7 years. The carbon sinks are projected to sequester 1 million metric tonnes of carbon dioxide, a major greenhouse gas that contributes to global warming. In July this year, TEPU had to diversify its energy portfolio and went ahead to acquire a 28.3% stake in the 250MW Bujagali Hydropower plant. TotalEnergies will further acquire minority stake in projects under development in Rwanda (260 MW) and Malawi (360MW). The move answers the apparent energy transition demands, where clean energy is a priority.
Although Uganda’s oil journey seems tested, emphasized by the socio-economic, environmental turbulence, and a glimpse of the project scrutiny pending first oil, the real test lies ahead when oil build up and production at plateau set in. Still, as the global waxy crude oil market size tends towards $1.33 billion by 2032 from $0.91 billion this year at a compound growth rate of 4.9%, Uganda will need to be steadfast at optimizing the market. Addressing restraining factors and ensuring uninterrupted midstream and downstream activities by EACOP and the refinery respectively.
