Uganda eyes LPG windfall from Lake Albert oil projects
Uganda is eyeing a windfall on Liquefied Petroleum Gas (LPG) once its Lake Albert projects commence commercial production of oil next year, seeing itself as a net exporter onwards.
This will also mean cleaner cooking options in the country just as much as a change in the dynamics of the commodity in the regional market.
Uganda has struggled to implement its LPG and clean cooking programme for years now. It began five years ago but has remained in first gear, with less than 100,000 free cylinders distributed against a target of one million.
Consequently, the country's penetration has remained below 3 percent.
Currently, Uganda imports all the LPG it consumes from overseas producers like China, India, the US, United Ara Emirates and regional leader Kenya, but the imports meet a supply chain that lacks the necessary experience in storing the product, and the infrastructure does not adequately support its distribution.
Gilbert Kamuntu, the Chief Commercial Officer of the state-owned Uganda National Oil Company (Unoc) says Uganda's LPG landscape is about to experience a shift.
He explains that when oil production begins in 2026, the CNOOC-operated Kingfisher project is expected to produce 20,000 kilo tonnes of LPG, which will increase Uganda's consumption by 50 percent, from the consumption of 40,000 kilo tonnes to 60,000 kilo tonnes.
Subsequently, LPG production from the 190,000 barrels per day Tilenga project will peak at 80,000 kilo tonnes. Additionally, the 60,000 barrels per day Hoima refinery, will churn out up to 220,000 kilo tonnes annually, raising Uganda's total capacity to 320,000 per year.
Aggrey Ashaba, the UCEM Governing Council Chairman, believes that Uganda can leverage this opportunity to become a regional energy hub. With a renewables and hydropower capacity of 2,048MW, Uganda could become a net-electricity exporter, and a net-exporter of LPG from the Lake Albert oil and gas projects.
However, critics argue that despite the potential for increased access, availability and affordability of the product, the lack of regulation and safety measures could hinder its uptake.
Emmanuel Mageni, the Chief Executive Officer of Ultimate Gas Energies Limited, points out that Uganda's low consumption of only 40,000 tonnes a year compared to Kenya's tenfold higher consumption, or even Rwanda's 34,000 tonnes, highlights underlying issues that must be addressed to boost uptake, with or without production from the Lake Albert projects.
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