Uganda Launches New Crude Grade as First Oil Exports Near

Uganda is approaching its entry into the oil export market, but getting its new Pearl Sweet grade to buyers will be harder than its low sulphur content might suggest. The country’s two projects are expected to produce 230,000 b/d at plateau, opening a yet untapped revenue stream for the landlocked economy. Yet the crude’s high wax content requires heating from the production facilities through to its destination, adding costs and narrowing the pool of buyers. With production deadlines slipping and the export pipeline still incomplete, Uganda’s challenge is turning its oil reserves into a reliable, commercially competitive export business.The developments lie near Lake Albert in the Albertine Graben Basin, with ownership shared between TotalEnergies (56.67%), China’s CNOOC (28.33%) and Uganda’s UNOC (15%). Development drilling began at Kingfisher in January 2023 and at Tilenga only a couple of months later in June. The TotalEnergies-operated Tilenga holds an estimated 1.2 billion barrels of recoverable resources and is expected to produce 190,000 b/d, while the CNOOC-operated Kingfisher holds around 270 million barrels and targets 40,000 b/d. Their output will be blended into Pearl Sweet at the shared Kabaale facilities in Hoima. Uganda initially targeted first oil for June 2026, but construction and commissioning of the upstream facilities and the East African Crude Oil Pipeline (EACOP) missed that deadline. Officials now expect Kingfisher to start in December at 25,000 b/d, followed by Tilenga in the first quarter of 2027. UNOC’s expectation of a first Suezmax shipment in December, announced at the Singapore APPEC conference, therefore looks ambitious and is unlikely to happen this fast - production at the field must first fill the pipeline before sufficient crude can accumulate at the coast for an export cargo.Pearl Sweet’s principal attraction is its sulphur content of approximately 0.16%, alongside an API gravity range of 27–28 degrees. However, it is exceptionally waxy, giving it a disadvantage of a pour point of roughly 39°C (inviting comparisons to Sudan’s Dar and Nile blends). The oil therefore requires heating through the pipeline, terminal tanks, transfer systems and tanker voyage.For landlocked Uganda, the route to market runs through Tanzania’s Tanga port. The $5.6 billion EACOP stretches 1,443 km, with around 20% running through Uganda and the remainder in Tanzania. Designed for peak throughput of 246,000 b/d, it will use 27 heating stations to maintain the crude at approximately 50°C. Construction was reported to be 92% complete in early September, but electricity connections also remain a crucial challenge. The whole route will need around 43 MW of power – roughly 2% of Uganda and Tanzania’s combined power production capacity. Transportation to Tanga alone is expected to cost $12–13/bbl, shipping expense notwithstanding. The importance of uninterrupted heating is crucial for the project. It can be illustrated by the 1,500 km Petrodar pipeline carrying South Sudan’s waxy Dar Blend. In early 2024, fighting in Sudan disrupted operations and fuel supplies to pumping and heating stations. Oil gelled inside the pipeline, adding blockages to physical damage and stopping around 100,000 b/d of exports. Restoration and restart of exports took nearly a year, until January 2025, with much of the work involving clearing solidified crude and restoring safe operating conditions. This way, for Uganda, the lesson is clear: reliable electricity is fundamental to keeping exports moving.The same requirement extends offshore, where Pearl Sweet will need tankers with suitable heating capabilities. A planned 60,000 b/d domestic refinery could eventually absorb around a quarter of plateau production, reducing the volume requiring this export chain. However, with an investment decision targeted for February 2027, that project remains at an early stage. Initial production will therefore depend on foreign buyers.No first buyer has been disclosed, although Vitol’s appointment to market Uganda’s share in the project provides an established commercial route. The Pearl Sweet grade will be priced against Brent, and a discount looks inevitable. South Sudan’s Nile Blend (another sweet and waxy grade traded by Vitol) is currently sold at a discount of $3.75–4/bbl to Dated Brent, offering a reference point. However, Nile Blend’s pour point is around 10°C lower than Pearl Sweet’s, making it slightly less demanding to handle. That suggests Uganda may need to accept a wider discount to compensate buyers for the additional operating burden. The commercial question is how much refiners will pay for its low sulphur content once heating and transport costs are included.Marine fuels offer one potential outlet. Pearl Sweet could appeal to refiners producing very low sulphur fuel oil, or VLSFO, alongside low-sulphur petroleum coke. Vitol owns a 100,000 b/d refinery in Fujairah that has processed Nile Blend to produce VLSFO, as well as Malaysia’s 32,000 b/d ATB refinery, another marine-fuels producer. These assets offer a plausible fit, although ownership alone does not establish where Uganda’s first cargoes will go. Chinese refiners may also be interested in the grade, given a highly sophisticated profile of their plants.Commercial challenges are compounded by environmental opposition. Tilenga’s footprint includes operations in the Murchison Falls National Park, making the consequences of a potential spill particularly sensitive. Additional concerns stem from the project's emissions and the energy required to heat the pipeline. These pressures add another layer of difficulty to a project already dependent on coordinated construction, power supply and export logistics.Uganda has the reserves to become a meaningful regional producer, but the value of Pearl Sweet will need to reflect above-average transportation costs. A $12–13/bbl journey to the Tanzanian coast, shipping with additional heating expenses and a likely quality discount will all weigh on its eventual differential. First oil will be a milestone. The harder achievement will be keeping it flowing at a price that makes the long wait worthwhile.By Natalia Katona for Oilprice.comMore Top Reads From Oilprice.comDiesel Crunch Set to Worsen as Refining Capacity Falls Short, Industry WarnsMorgan Stanley: Oil Traders Are ‘More Precise’ With Risk as Wars Drag OnSinopec Sees China Oil Demand Falling 8.9% in 2026