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Uganda to borrow USD118 M from China to build roads key to oil production

February 17/2020

MOSCOW (MRC) -- Uganda said it would borrow up to 108.5 million euros (USD118.42 million) from a Chinese lender to fund construction of three roads that are key to plans to begin oil production in the east African country, reported Reuters.

Along with others in Africa, Uganda has received large credit lines from China in recent years as part of the Asian giants so-called Belt and Road Initiative, aimed at rebuilding the old Silk Road connection with Asia, Europe and beyond.

However US officials have been critical of Belt and Road lending, which they say can leave countries with excessive debt.

Construction of the so-called oil roads would accelerate efforts to commence crude oil production in Uganda, which has failed to take off 14 years after crude reserves were discovered in the countrys west.

The money will be borrowed from Chinas Industrial and Commercial Bank of China, according to a statement issued by the government that listed decisions taken at a cabinet meeting on Monday.

The statement said the roads are needed to facilitate the efficient development and production of the strategic national oil resources. It did not give details on the total length of roads to be built.

Ugandas oil fields are in the Albertine rift basin near the border with the Democratic Republic of Congo. Reserves are estimated at 6 billion barrels.

Frances Total co-owns the fields in equal stakes with Chinas CNOOC and UKs Tullow Oil.

Crude production has been repeatedly delayed over the years by spats over taxes and a lack of requisite infrastructure like tarmac roads in the fields, a crude export pipeline and a refinery.

A new impasse over taxes on Tullows planned divestment of part of its stake in the fields is seen as potentially pushing the production target of 2022 to a later date.

Last week the IMF cut its economic growth projection for Uganda for the July 2019 to June 2020 financial year, citing tardy progress with oil production.

The Washington, DC-based institution also warned Ugandan authorities to exercise fiscal discipline and maintain debt sustainability.

Ugandas public debt, the IMF calculates, is expected to hit the key benchmark of 50% of GDP as early as the 2021/22 financial year.

As MRC informed earlier, in November 2019, Total disclosed that it is evaluating construction of a new gas cracker at its Deasan, South Korea, joint venture (JV) with Hanwha Chemical.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,093,260 tonnes in 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments rose from both domestic producers and foreign suppliers. The estimated PP consumption in the Russian market was 1,260,400 tonnes in January-December 2019, up by 4% year on year. Supply of almost all grades of propylene polymers increased, except for statistical copolymers of propylene (PP random copolymers).
Author:Margaret Volkova
Tags:PP, PE, crude and gaz condensate, PP random copolymer, propylene, ethylene, petrochemistry, CNOOC, Hanwha Corporation, Total Petrochemicals, China, Russia, Uganda, South Korea.
Category:General News
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