New oil companies’ licences awaiting Cabinet approval
Kampala.
Government has set end of April as deadline for finalisation and signing of the Production Sharing Agreement (PSAs) for awarding (exploration) licences to the three oil exploration companies that made it to the last round during the first competitive bidding that opened in 2015.
Mr Robert Kasande, the acting director of the Entebbe-based Directorate of Petroleum, told Daily Monitor that negotiations on the draft ‘model’ PSAs, have been concluded and a copy is due to be forwarded to the Solicitor General for review and to make comments.
A PSA is an agreement(s) between an oil company and a government, detailing the terms on which any discoveries of oil and gas will be shared.
The new PSAs, ministry of Energy officials have maintained and Mr Kasande reiterated, are “revised” based on several aspects he called the “country’s desires” but however was reluctant to divulge.
He, however, said the model PSA is in conformity with the 2013 Petroleum (Exploration, Development and Production) Act, which outlines criteria for applying for a petroleum exploration licence.
Negotiations for the PSAs, which revolve around among others work programmes, National Content and fiscal aspects like royalty, is the last step before granting exploration rights for the blocks the firms bided for.
The agreements are for exploration licences for three oil blocks, the Kanywantaba block measuring about 344 Square kilometre in Ntoroko District for Armour Energy Limited; Turaco (425 Km2) also in Ntoroko for WalterSmithPetroman Oil Limited; and Ngassa (410 Km2) in Hoima for Oranto Petroleum & Niger Delta Petroleum Resources.
The trio was the successful bidders from a pool of 16 that initially expressed interest in the six oil blocks up for sale during the bidding process. The bids for three oil blocks, Taitai & Karuka (565 Km2) in Buliisa District, Mvule (344 Km2) in Moyo/Yumbe and Ngaji block (895 Km2) between Rukungiri and Kanungu, did not materialise.
These will join UK’s Tullow Oil PLC, France’s Total E &P and China’ Cnooc licenced to operate in Uganda.
Snubbed
The Ngaji block, which covers half of Lake Edward, and a part of Queen Elizabeth National Park, the part said to be part of the same ecosystem as Virunga – Africa’s oldest national park and a UNESCO World Heritage site, was specifically snubbed due to its eco-sensitivity and uproar put up by environmental campaigners.
However, there have been talk that during the ongoing negotiations, government had struck a deal with Oranto Petroleum and Niger Delta Petroleum Resources for the block, something Mr Kasande denied.
More volumes
Current oil volumes from the fields appraised in the Albertine surpass the 6.5 billion barrels mark. However, only 40 per cent of the 23,000 Sqkms Albertine size has been appraised so far.
From the earlier PSAs negotiated with Tullow (later sold to Total and Cnooc), the World Bank estimates Uganda could rake in Shs7 trillion ($2b) annually in oil revenues when production starts in four years’ time, according to government’s timelines.
Still that withstanding, profitability is hinged on the PSAs as they were negotiated, and for which civil society groups claim the country got “raw deal” but the Mr Kasande said the country’s total take is good. Total take includes both royalties and shared dividends. There is just too much speculation about Uganda’s total take.
