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On the 26th of September 2022, a new milestone was achieved in Uganda’s oil and gas industry. The first set of the Drilog and Welleader system and the LR8001 land rig equipment started arriving in Kikuube District, in Western Uganda’s oil-rich Albertine Graben.
And this is no ordinary rig. According to CNOOC Uganda, the operator of the Kingfisher Development Area, it is a customised deluxe land rig and the “most advanced Chinese oil drilling equipment in the oil and gas industry exploration and development sector.”
The rig, said to be 8km long, once assembled, is the first fully automated silent rig in Africa, and it is equipped with industry-leading technologies such as well site de-noising control, zero discharge system, and pipe column automation system, according to CNOOC Uganda.
“The whole set of equipment supports the integrated operation of various wellbore and well types, and during the operation effectively protects the regional ecological environment. 18 to 20 trucks are expected to be delivered daily for the next 3 weeks from Malaba to Well pad 2 at the Kingfisher Development Area,” CNOOC Uganda said in a statement.
CNOOC Uganda is a subsidiary of CNOOC Limited, China’s largest producer of offshore crude oil and natural gas and one of the world’s largest independent oil and gas exploration and production companies.
The arrival of the rig was celebrated gleefully across the industry.
“This oil drilling equipment will support Uganda to become an important crude oil producer in East Africa. The equipment shall also provide some localization job opportunities for Ugandans during the well-drilling and completion process, train more localized talents for oilfield development and bring tangible changes to local economic development and livelihood to make the ‘Pearl of Africa’ brighter,” said Mr. Chen Zhuobiao, President, of CNOOC Uganda.
Away from the cameras, what remained unsaid and probably celebrated was that the entire logistics of offloading, customs clearing and transportation of the rig from Mombasa to Kikuube, a distance of about 1,450 kilometres had also been entrusted to a Ugandan company—DDG Oil and Gas Logistics Limited (DDG).
You will be forgiven if at this stage you still want to believe that DDG Oil and Gas Logistics is a subsidiary of one of the big multinational freight companies. I was thinking the same too.
My journalistic curiosity got me working the phones and after a few calls, I had a name and a contact phone number of one of the DDG Logistics founders and directors, who I was later to find out, was a former colleague; ok a boss, at Monitor Publications Limited, back in the early 2000s.
This man is Isaac Nsereko.
I reached out to him via WhatsApp and introduced myself and my reasons for reaching out—I needed to document this incredible Ugandan story. Lucky for me again, he still remembered me, and he straightaway agreed to an interview.
An All-Ugandan Freight Giant Is Born
The story of DDG, according to Nsereko, is a story of “friendship, comradeship and more importantly a, shared purpose; a purpose to play big in the oil and gas industry.”
This is why, although you could say DDG Oil and Gas Logistics was incorporated in June 2021, as soon as it was registered, the company instantly became 75+ years old- because that is the combined years of experience of the constituent shareholder companies.
The 5 shareholder companies: Daks Couriers, Richflo Lift Services Ltd, DT Logistics, RI Distributors and Globe Trotters Limited, are all Ugandan-owned companies.
Daks Couriers was founded in 1999, by David Kasingwire and has since grown into a respectable freight, logistics, courier, warehousing & storage as well as customs clearance firm, and an Authorized Economic Operator.
An Authorized Economic Operator (AEO), according to the World Customs Organisation (WCO) is a party involved in the international movement of goods, that has been approved by, or on behalf of, a national customs administration as complying with WCO’s or equivalent supply chain security standards. AEO status is an internationally recognised quality mark that shows the holder has customs control procedures that are internationally accepted. Because they are recognised as low-risk companies, they are usually accorded faster clearance procedures with customs.
Richflo Lift Services Limited, the second partner, was founded in 1997 by Richard Magezi and is one of the largest lifting services companies in the region with a range of cranes and forklifts. Globe Trotters Limited, the third shareholder, was founded by Harold.B.Ssemalwadde in 2006 and offers freight services, customs clearing and forwarding, lifting and material handling as well as storage and warehousing. It also has AEO status.
Incorporated in 2014, by Isaac Nsereko, RI Distributors is a trade and logistics firm with a customs clearing component and is as well, an Authorised Economic Operator. DT Logistics, incorporated in 2017 is principally a road freight (haulage) services company and a sister company to RI Distributors.
“Together we have a combined 75+ years of experience, over 200 trucks, over 20,000sqm of warehousing capacity, 50 pieces of assorted lifting equipment and close to 100 acres of storage yard space across the country. The companies, all together have a combined workforce of 180 people,” Nsereko, says.
“The combined balance sheet of DDG Oil and Gas Logistics shareholders is in the tens of millions of dollars— more than enough for the biggest logistics work that you can get in these oil & gas projects,” he adds.
United By Past Chemistry And The Need To Succeed
Nsereko, explains that he and Kasingwire of Daks Couriers, had always known each other back from his Monitor Publications’ days when Nsereko was the Sales and Marketing Manager, and Daks was the distributor for the newspapers and in between them, they enjoyed what he calls a “natural fit”.
On joining the logistics business in 2014, after leaving MTN Uganda, where he had risen to the rank of Chief Marketing Officer, Nsereko, then got to know Semalwadde of Globe Trotters.
“We worked together. In fact, my first batch of trucks was kept at his parking yard in Buto, Mukono. Once I got to know him, the business chemistry between us just clicked,” Nsereko recalls.
As for Richard Magezi of Richflo, yes they knew him before, but his leadership in the lifting business in Uganda was such an irresistible pull factor.
“In the oil & gas business, lifting is such a huge component, so we had to get a Ugandan lifting partner with a similarly sized ambition and ability and Magezi Richard of Richflo Lift Services Ltd came naturally because he was already a leader in that field,” Nsereko says, adding: “We wanted to have a purely indigenous joint venture that would be truly local content in every sense of the word, but one that also had the right scale to compete.”
Once the right partners had been identified, they came together under a loose agreement, which eventual was transitioned into a fully-registered limited liability entity—DDG Oil and Gas Logistics Limited, in June 2021.
The company is also registered with the Petroleum Authority of Uganda’s National Supplier Database (NSD) for the oil & gas sector.
“Whereas our businesses are competitors in the normal haulage/transport and logistics business, the spirit of DDG Oil and Gas Logistics is such that whatever job we get as oil and gas, we do it under DDG Oil and Gas Logistics,” Nsereko further explains.
“But more importantly, it has helped that we knew each other before. We are not just coming together now. We have known each other for a long time- that is our story,” he says.
DDG’s first but most complex task
“Our scope was to handle the equipment from the ship at Mombasa, offload the vessel, do the port documentation, do the Kenya Revenue Authority documentation, the Uganda Revenue Authority documentation and haul it to the Kingfisher development area— altogether 250 truckloads of equipment over a distance of over 1450 kilometres in 30 days,” he says.
He says that much as this DDG’s first assignment, it is probably the most complex as the next rigs are expected to be smaller.
“The timelines are very tight, the equipment is extremely complex- it is not just containers. It is stuff, in different shapes, some of which you have to put on the truck and figure out how to balance it, during transit. We have to measure- ahead of time, whether it will go through the bridges and beneath all the electricity lines that cross the various roads along the entire route. The level of complexity and detail, that we are working through is extremely complex,” Nsereko says, adding however that the experience and the learning are worth it all.
“One of the things that we decided, long before the bids, is to make sure that we had the scale to play big— to be able to do jobs of this complexity and size. Much as we have literally surprised ourselves, and many other stakeholders, to a great extent we were prepared for it.”
Nsereko also adds that the complexity of the job has come along with it invaluable lessons and experiences, which have battle-hardened them for future similar assignments.
Ernest Rubondo, the Executive Director, of the Petroleum Authority of Uganda (PAU) who from the very onset of oil discovery in Uganda has always rooted for local participation, even to the point of sometimes being perceived by stakeholders as obstinate, hailed the milestone as trailblazing and “value-retaining”.
“As activity in the sector picks up, we are seeing more Ugandan companies participating in the sector. This includes Ugandan companies working together to undertake bigger scopes of work that they otherwise wouldn’t have accomplished alone, such as the rig transporter DDG Oil and Gas Logistics which is a joint venture/ consortium of five (5) Ugandan companies including DT Logistics Ltd, RI Distributors, Globe Trotters Ltd, Daks Couriers and Richflo Lift Services Ltd. This is a big contributor to enhancing value retention. The Authority is also ensuring that Joint ventures between Ugandan and Foreign companies increase the value retained in the country’s economy and knowledge/ skills transfer,” he said in an emailed comment.
“The oil and gas contracts are of high value with the ‘small’ ones being in the tens of millions, and the big ones in the hundreds of millions. It’s important that we see Ugandan companies coming together or partnering with international companies to undertake this work. With this progress, we expect to meet or even surpass the national content targets for the oil activities,” he added.
CNOOC Uganda too, said they were elated that the Ugandan private sector continues to up its game and reiterated its continued support.
“CNOOC Uganda Limited ensures competitive and gainful participation of local citizens and the private sector with respect to employment and supply of goods and services. It strives to improve its national content performance, and helps the national suppliers to be able to take on the opportunities, and support the national companies to play a more active role in the oil and gas industry,” Aminah Bukenya, Media and Publicity Manager, Corporate Affairs, said in an email to this reporter.
Lessons learnt by DDG so far
Just like Rubondo, Nsereko also agrees that this milestone is both a win for DDG, but more importantly, it is a win for local content.
“The successful completion of this job will give confidence to the market especially local content because when the local content law was drafted and even from way back there have always been lingering doubts about what Ugandan companies are capable of. This will go a long way in clearing some of those remaining doubts,” Nsereko says.
For this particular rig job, Nsereko is very appreciative of the government agencies, especially Uganda Revenue Authority, immigration as well as the security agencies especially the police that have provided 24/7 security. All the government agencies have been fully aligned and cooperative.
Nsereko is grateful to the Government of Uganda especially the Petroleum Authority of Uganda for the efforts put into creating a conducive local content environment.
“PAU has been consistent in sharing with us information on the demand out there and what it takes, as well as preparing us, which has given us the time and ability to analyse the opportunities and then plot how to leverage them, including entering into such partnerships,” he says.
“Even with the partnerships, PAU’s legal and local content departments have been very supportive,” he adds.
Nsereko concludes with a piece of advice for the Ugandan private sector, especially those wanting to enter the oil & gas industry.
“This is an industry like no other. The level and detail of planning that one has to do are thorough. The clients are far more demanding than some of the other projects we have done- in terms of detail, and real-time reporting. The working capital requirements are extremely high. If you think you need about USD100,000 for an oil & gas job, you probably should be planning for USD200,000, because there will be other things cropping up along the way,” he says.