Uganda issues oil licenses to Tullow Oil and Total to speed production
The government of Uganda has granted Tullow and Total five and three oil production licenses respectively as it seeks to speed the exploration and production of crude oil.
This now brings to nine the total number of permits the government has issued to foreign investors after Chinese National Offshore Oil Company, CNOOC, got its license in 2013.
According to Uganda’s Energy Minister Irene Muloni, the licences cover Exploration Area One (EA1), operated by Total, and Exploration Area Two (EA2), operated by Tullow, told reporters. Speaking to reporters, Muloni said the offer of licences ended a period of protracted negotiations and it was that it was now time for serious work to start.
Commercial oil reserves were discovered in Uganda a decade ago, but production has been repeatedly delayed amid wrangling over taxation and field development strategy. Muloni now says commercial oil production is expected to begin in 2020. She added that when production from all the nine licensed areas starts, output would be between 200,000-230,000 barrels per day said.
Exploration efforts for more hydrocarbons have also been enhanced with the signing of production sharing agreements (PSAs) with three Nigerian and one Australian earlier this month.
The licences offered are valid for 25 years and can be renewed for an additional five years. Tullow and Total are required to make final investment decisions 18 months after receiving the licences.
Uganda wants to build a $2.5 billion refinery to process its crude so it can earn more from its oil resources, which it discovered in 2006. Efforts to secure a private developer and operator of the facility are underway.
The domestic refinery, aimed at processing 60,000 barrels per day, will reserve the right of priority access to the Ugandan crude and the remainder will be exported via a crude pipeline to the Indian Ocean port of Tanga.
Tullow and Total are expected to invest a combined $8 billion in infrastructure required to support oil production, including drilling 500 wells and erecting central processing facilities and feeder pipelines.
The companies are expected to invest a combined $8 billion in infrastructure that is oil related. The investments will among others include drilling of about 500 wells, construction of central processing facilities and feeder pipeline.
Uganda has 6.5 billion barrels worth of reserves in its fields located near its border with the Democratic Republic of Congo, according to estimates by government geologists.
