Uganda issues oil production licences, targets 2020

Uganda on Tuesday issued oil production licences to the French group Total and British company Tullow. Energy Minister Irene Muloni said first oil production is now expected in 2020.

Experts say the government hopes to earn $1.5 billion a year from oil exploitation, particularly from taxes, royalties and a 15% share of the benefits entitled under an agreement in 2009, with Total, Tullow and CNOOC.

While issuing the licences, Energy Minister Muloni said that the oil companies are expected to invest over $8 billion in infrastructure required for oil production from the Lake Albert basin. An average of 1.7 billion barrels are expected to be produced annually.

While awarding the eight oil production licences in Kampala, the Ministry of Energy and Mineral Development confirmed that after initial bottlenecks, all was now clear for Total and Tullow to join Chinese company CNOOC whose licence was issued in 2013.

The pipeline to the Tanzania port of Tanga, 1400 km from the Lake Albert region, is yet to be built, and part of the $ 8 billion in infrastructure investment will include building this link. Uganda and Tanzania agreed early this year to jointly develop the pipeline from the Lake Albert basin to the Port of Tanga.

According to experts, Uganda’s oil reserves in the Lake Albert basin, part of the border between Uganda and the Democratic Republic of Congo (DRC), are estimated at at least 1.7 billion barrels.

Production licences issued are for 25 years and can be renewed for an additional five years according to the production Sharing Agreement (PSA).

“Five production Licences have been granted to Tullow Uganda Operations Pty Limited (Tullow) the operator of EA2, and three production Licences have been granted to Total E&P Uganda BV (Total) for the operator of EA1” reads a statement issued today. Oil was first discovered in the region in 2006.

Source: The Independent (Uganda) 

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