Uganda is in talks to finance the building of a $4bn oil refinery with Dubai-based Alpha MBM Investments after having failed to secure funding for the project last year, leading to a consortium that included a division of the US firm Baker Hughes to withdraw.

“Expressions of interest were received from several potential investors, and they were evaluated following which a memorandum of understanding was signed [in December 2023],” Minister of Energy and Mineral Development Ruth Nankabirwa told a news conference on Tuesday (January 23, as reported by Reuters.

Kampala was forced to seek new funding to build the oil refinery in June, after a Project Framework Agreement with Italian and US companies expired. The Ugandan government and Alpha MBM Investments began negotiations over the important commercial details on January 16 and are anticipated to finish within three months, she added.

The East African’s developing hydrocarbon industry depends on the 60,000 barrel per day (bpd) refinery. Uganda hopes to begin commercially extracting crude in 2025 from fields in the Albertine Rift Basin, near the border with the Democratic Republic of the Congo (DRC).

The government jointly manages the fields with China’s CNOOC, France’s TotalEnergies, and the state-run Uganda National Oil Company (UNOC).

Nankabirwa told reporters that CNOOC received permission from Uganda on Tuesday to produce liquefied petroleum gas (LPG) at a plant to be built in the Kingfisher development area, where the company is now operating. Uganda has an estimated 500 billion cubic feet of gas reserves.

She also said that the new Kabalega Airport, a logistics centre for the oil and gas project, is now 95% complete while Kingfisher, one of two production sites, was also well ahead of schedule.

President Yoweri Museveni’s administration hopes to increase employment rates and gain from technology transfer by processing part of its crude domestically.

A 1,400km heated oil pipeline – which once completed will be the world’s biggest – is part of a $10bn international project with the potential to lift millions of Ugandans out of poverty by delivering cheaper fuel and potentially doubling national gross domestic product (GDP).

The East African Crude Oil Pipeline (EACOP) project, a collaboration with TotalEnergies EP Uganda, the CNOOC Uganda Limited and UNOC, aims to cut reliance on neighbouring countries for the shipping of fuel supplies.