Uganda has entered into talks with South Korea's SK Engineering-led consortium for the development of crude oil refinery in the country, with an investment of $4bn.


The consortium members also include SK KBD Global Investment Partnership, Private Equity Fund, China State Construction Engineering Co-operation, Haldor Topsoe and Maestro Oil and Gas.

The move comes as the government suspended negotiations with Russia’s Rostec Global Resources-led group for the refinery project.

Reuters cited Ugandan Energy Ministryas saying in a statement that RT Global Resources consortium have made additional demands prior to signing the deal with the government last month.

The RT-led group included Telconet Capital, VTB Capital, Tatneft JS and South Korea-based GS Engineering & Construction.

An agreement in principle was signed between the government and the RT Global consortium in May.

The Ministry of Energy and Mineral Development said in a statement: "Consequently Government was left with no choice but to halt negotiations and draw the bid bond.

"Government is now proceeding to invite the Alternate Bidder-SK Engineering & Construction for negotiations."

The $4bn refinery project involves construction of the 60,000-barrel-a-day refinery and a 205k oil-product pipeline, reported Bloomberg.

The refinery aims to process the hydrocarbon reserves in the country that were uncovered in 2006.

The government plans to invest 40% in the construction of the refinery. It will also have an option to divest stakes to partner states in the East African Community.

Image: The new refinery in Uganda will process the hydrocarbon reserves which were uncovered in 2006 in the country. Photo: courtesy of Vichaya Kiatying-Angsulee/