Uganda invites new oil exploration bids

Tuesday December 04 2018
ug oil

Tullow Oil workers at a rig in Buliisa in Uganda. The government is is lobbying for investors in its Albertine fields to prospect for oil. PHOTO FILE | NMG


Ahead of the second competitive round for exploration licences in 2019, Uganda is lobbying for investors in its Albertine fields to prospect for oil.

State Minister for Energy and Mineral Development, Peter Lokeris, told international oil firms, financing groups, oil lawyers and consultants gathered in Juba on November 21 that Uganda is an attractive destination for oil investments.

“Out of 121 wells drilled, 106 had hydrocarbons,” he said, adding that out of the 6.5 billion barrels of oil so far discovered since 2006, some 1.4 to 1.7 billion barrels are recoverable.

However, these discoveries, which include some 500,000 cubic feet of gas, cover only 40 per cent of the Albertine Graben, with two-thirds of the region yet to be explored.

“Uganda will open the second bidding round for exploration licences in May 2019, for which licences will be issued by 2020,” Mr Lokeris told the participants at the second South Sudan Oil and Power Conference.



About a fortnight earlier, Energy Minister Irene Muloni, who led a Ugandan delegation to the Africa Oil Week conference in Cape Town, said that technicians in the ministry were processing data on the oil blocks due for licensing, to be shared with the interested bidding companies.

Kampala’s delegation included Ernest Rubondo, the executive director of the Petroleum Authority of Uganda, and the chairman of Uganda Chamber of Mines and Petroleum, Elly Karuhanga.

Next year’s exercise will be Uganda’s second competitive bidding round since the new petroleum law introduced transparency in the licensing of new players.

In the first competitive round in 2016, the country issued only two licences — to Nigeria’s Oranto Petroleum for the Ngassa block and Armour Group from Australia for the Kanywataba area — for four years from 2017.

Oranto is becoming a major player in African oil, with activities in a number of countries including South Sudan, where the company was issued an exploration licence for Block B3 in March last year, and has already completed an aeromagnetic survey.

“We are waiting for interpretation of this data to inform where drilling will be done,” says Oranto South Sudan country manager George Olugbenga Adesanya.

Mr Adesanya said the firm will spend $500 million over six years in South Sudan to develop the more than 24,000 square kilometre Block B3. The work plan includes seismic studies, minor and major drilling.

Besides Uganda and South Sudan, Oranto also holds exploration licences in Equatorial Guinea, Sao Tome and Principe, Senegal and Zambia and now, according to Mr Adesanya, the company wants to expand its presence in the East African oil and gas exploration sector.

“If Kenya is open, we will move in,” he said.

Insecure countries

He added that international investors are still undecided due to the risk profile of countries that are prone to insecurity, political instability and corruption.

For instance, in 2012, industry studies cited Uganda as a risk destination for oil and gas investment due to political interference.

This was after parliament launched investigations into the farmdown by Tullow Oil of two-thirds of its interest to Total E&P and China National Offshore Oil Corporation.

Ugandan authorities have also been cited negatively in tax disputes with oil companies, as well as in government field development and production plans that contradict those of the oil firms.

Despite this, Standard Bank Group head of oil and gas Dele Kuti describes Uganda as an attractive market for oil and gas investments.