Africa Oil & Gas: Ugandan Hydrocarbon Industry Could Create Thousands of Well-Paid Jobs

Uganda’s growing oil and gas industry could create thousands of well paid jobs, although its development is likely to be subjected to delays.

The development of Ugandan hydrocarbons could create thousands of well paid jobs, analysts said, highlighting the potential employment power of the oil and gas supply industry in the country.

“The opportunity is quite big in the supply segment … [these jobs would create a] big impact for a small country like Uganda,” Renaissance Capital oil and gas analyst Ildar Davletshin told Rigzone.

A lot of the available oil and gas roles in Uganda will go to locals, although expats will also have some opportunities within the developing industry.

“There are local content requirements for training and employment that the oil companies must follow. This will determine that a certain, and growing, percentage of the workforce is Ugandan,” Alasdair Reid, an oil and gas analyst at Wood Mackenzie specializing in Sub-Saharan Africa, told Rigzone.

“Specialist positions will tend to be filled by expats until training and education programs can provide a pool of qualified Ugandan employees,” he added.

Despite various privately financed training schemes that have been rolled out in recent years, there is currently an oil and gas skills shortage within the local Ugandan community, Charlotte King, an oil and gas analyst focusing on Uganda at The Economist Intelligence Unit, said.

“Training schemes/institutes have only really taken off since 2009/10 so the number of graduates is fairly low,” she told Rigzone.

Commenting on the skills gap within the country, Woodmac’s Reid stated that oil and gas is a complex technical business and many positions take years of study and training.

“The process is made more difficult in countries that have underinvested in secondary and tertiary education as the pool of potential hires is smaller,” said Reid.

Employment Peak

Uganda’s oil and gas industry employment is expected to peak during the construction and field development phase, and new jobs will be dominated by low-skilled laborers who will be largely drawn from the local workforce, King said.

“Employment in the sector will fall thereafter, with most roles for low-skilled laborers withdrawn during the production phase,” King told Rigzone.

Woodmac’s Reid agreed that the construction and development phase of Uganda’s growing oil and gas sector will create more jobs, as there will be more scope for semi-skilled roles.

“Support functions will provide the most opportunities for local contractors, particularly in the early stages,” said Reid.

Investment in Uganda’s Oil, Gas Industry

Uganda’s Energy Minister Irene Muloni expects around $8 billion to be invested in the country’s oil and gas industry before it begins producing crude oil in 2020.

Analysts are however skeptical over the viability of this expectation.

“If Uganda is to develop production capacity of 200,000 to 230,000 barrels per day, as per the developers’ plans, this level of investment would be necessary,” King said.

“Given the infrastructure deficit in the Lake Albert region and the scale of financing that developers need to raise, delays are highly likely. Plus, since Uganda has no experience of oil production, sourcing local goods, services and workers will take longer than it does in established oil industries. Therefore, we expect the investment to materialize more gradually than the government currently expects. In our view, production is unlikely to reach full capacity by 2020 … 2022-23 seems more viable,” she added.

Meanwhile, Will Forbes, director of oil and gas at Edison, agreed that the likelihood of receiving this level of investment before 2020 is low, adding it could easily be years after 2020 when any substantial crude exports occur.

“I doubt Uganda will receive this amount of investment by 2020 as the low oil price environment is forcing companies to focus on projects with shorter paybacks, even if some of them have higher breakeven prices,” Capital’s Davletshin said.

“2020 looks to be the optimistic outcome in the current environment … from global experience, most large scale projects normally get delayed by at least 1 to 2 years and often face [capital expenditure] overruns,” Davletshin added.

In addition, Woodmac’s Reid added that investment in Uganda’s oil and gas industry will be slightly higher than the government’s estimate, at $9.2 billion, including costs throughout the life of the project. Producing crude in 2020 is not an impossible target, but it is a complex project in a country that has never developed oil before, Reid said.

“Uganda does not have an existing supply chain and the fields are located 932 miles (1,500 kilometers) inland from the export terminal. There are clearly a number of issues that could stretch the timeline to first oil,” said Reid.

Wood Mackenzie predicts first production in 2022.(source: rigzone)

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