Aprotracted standoff between the autho- rities in Uganda and oil companies over the extraction of crude could soon be over, as it has emerged that a deal is in the pipeline.

Uganda President Yoweri Museveni revealed that the East African nation is about to conclude an oil and gas extraction pact with oil companies that have discovered oil deposits in the country.

“We are now about to conclude an oil and gas extraction plan that will be equitable to Uganda and the oil companies,” Museveni said recently.

This comes after Uganda vigorously opposed schemes by the oil companies that “would have denied Uganda maximum benefits” from the oil discovered in the Lake Albert region.

“Uganda discovered oil in 2006 but has not been able to start extraction owing to a battle our country has had with oil companies. Some of them had the stereotype impression about Africa and were unable to understand our needs, let alone develop our resources properly. We rejected those schemes,” said Museveni in Kenya’s capital, Nairobi, during the inauguration of Kenya’s new President, Uhuru Kenyatta.

The revelation by Museveni that a deal is in the offing means that crude could soon start flowing in Uganda, which has oil reserves estimated at 3.5-billion barrels.

Since the discovery, the Uganda government has been at loggerheads with oil majors Tullow Oil, of the UK, and its partners, France’s Total and Cnooc, of China, over issues ranging from revenue sharing, the construction of a refinery and the enactment of new oil and gas laws, besides others.

Although the oil companies have been pushing government to allow small quantities to be sold in the open market in order to recoup part of their massive investments, Uganda has resisted to a point where Museveni called the oil companies “parasites who want Uganda to give away the resource for a morsel of food, as did Esau in the Bible”.

“We intend to meaningfully exploit our resources, which God has given us, add value to them and grow our economy to maturity and begin a break from poverty,” said Museveni in Nairobi.

Although he did not reveal details of the agreement with the oil companies, Uganda has been categorical that the crude will be refined in the country and has already passed two pieces of legislations to cement its resolve.

The two laws are the Petroleum (Explora- tion, Development and Production) Bill of 2012, which will govern upstream petroleum activities, including procedures for licensing, environmental safeguards, transparency rules and government’s institutional set-up, as well as the Petroleum (Refining, Gas Processing and Conversion, Transportation and Storage) Bill of 2012, which will govern downstream activities.

The Uganda government plans to build a 60 000 bl/d refinery, which will later be expanded to 120 000 bbl/d and then 180 000 bl/d to secure reliable supplies of low-cost petroleum products to Ugandans. Surplus production will be exported to neighbouring countries.

While oil companies have disputed the rationale for a refinery, government’s justification is based on a study conducted by global engineering company Foster Wheeler, which contends that the refinery would save the country over $1-billion and that the economy would also gain in terms of employment and taxes.