In April, the Covid-19 Business Info Hub focused its efforts on understanding the landscape of the Oil and Gas value chain and the opportunities available for SMEs to participate in the sector. We spoke to a variety of stakeholders, including regulators, SMEs, and organizations offering business development and capacity-building opportunities. Read below to understand what we learnt from the interactions!

 

What is the landscape of the Oil and the Gas Sector? 

The Oil and Gas value chain is made up of opportunities along different phases, ranging from exploration, production, export, refining, and storage, among others. Licensed oil companies completed the first oil projects in Uganda, and the focus is now on the development and production phases. The industry is currently awaiting the Final Investment Decision (FID), the gateway step into the production phase. The government and oil companies have done a lot of work to ensure that both the FID’s technical and commercial requirements are in place.

Two major upstream projects, the Tilenga and Kingfisher projects, are ready, and some of the main project contractors have been identified. The necessary agreements for the East African Crude Oil Pipeline (EACOP) are in the final stages. Planning for a refinery, which is the second monetization project, is also on course. The sector has other ongoing exploration projects in the Kanywataba exploration area and the Ngassa shallow and deep play exploration areas.

Monitoring and regulation of sector operations is under the purview of the Petroleum Authority of Uganda (PAU), and the Uganda National Oil Company  (UNOC) is mandated to manage commercial aspects of petroleum activities and the participating interests of the state in petroleum agreements.

 

What opportunities are available for SMEs in the sector?

SMEs have many opportunities in the Oil and Gas Value Chain, including both direct and indirect. Direct opportunities for SMEs are available under the 16 sector categories that have been ring-fenced for Ugandans. These categories include: (a) Transportation, (b) Security, (c) Foods and beverages, (d) Hotel accommodation and catering, (e) Human resource management, (f) Office supplies(g) Fuel supply, (h) Land surveying, (i) Clearing and forwarding, (j) Crane hire, (k) Locally available construction materials, (l) Civil works, (m) Supply of locally available drilling and production materials, (n) Environment studies and impact assessment, (o) Communications and information technology services and (p) Waste management. They represent a good gateway for SMEs interested in the sector.

Indirect opportunities are also available along the value chain and include things like mobile money services, hairdressing, transport, delivery, recreation services, and many more. These opportunities for SMEs are many in and around camps set up in the oil region.

 

How can SMEs tap into these opportunities?

A number of different stakeholders are focused on helping SMEs build the skills they need to succeed in the Oil and Gas sector in Uganda. They disseminate information on the various opportunities available and help SMEs understand the requirements for their participation.

A first step for SMEs interested in the Oil and Gas value chain is to register on the National Supplier Database (NSD). The industry will not offer contracts to any company unless they are registered on the NSD. SMEs venturing into the sector should consider entering into joint ventures with international companies with existing experience and knowledge in the industry. Joint ventures will facilitate the transfer of knowledge to the local SMEs, thus empowering them to participate in the value chain’s different stages.

SMEs need to understand contractual obligations and seek appropriate financing to execute contracts. SMEs must aggressively search for information and ensure that they are responsive to available opportunities. Most contracts are advertised in newspapers and via online platforms, which requires SMEs also ensure they are digitally savvy enough to access online announcements.

Finally, SMEs should participate in capacity building training to acquire knowledge and skills to participate in the sector. Training is critical to enable SMEs to comply with standards like the Quality, Health, Safety and Environment (QHSE). SMEs can out to the following organizations to learn more about the training programmes:

 

To learn more about the opportunities in the Oil and Gas value chain, visit:

  • Website: https://www.unoc.co.ug/ 
  • Email: info@unoc.co.ug
  • Twitter: @UNOC_UG