Monday May 28 2012

Oil firm withdraws operations in midwest

By Issac Imaka

Dominion Petroleum Limited, one the companies prospecting for oil in Midwestern Uganda, is withdrawing its operations from the country.

In 2007, Dominion Petroleum signed a Production Sharing Agreement with the government which granted it exclusive rights to explore for petroleum in exploration area 4B.

Although it is not yet clear why the oil company pulled out, information from sources within the company indicate that Dominion, recently bought off by Ophir-energy, last week informed the Minister of Energy, Ms Irene Muloni, that they had pulled out of the agreement.

When contacted, Ms Muloni said she was up country and had not seen the communication from the oil company.
The commissioner for petroleum exploration and production, Mr Ernest Rudondo, however, confirmed the development to Daily Monitor, saying that he “heard something like that.”

But Mr Rubondo said he is not sure what the oil company had exactly communicated to the minister because since it is about licensing, which is handled directly by ministry’s senior leadership and not his department.

“I have not seen the documents myself but they (Dominion) have issued something and tomorrow (today) or Tuesday we will have a substantive response on the issue after studying what the documents say,” he said.

Ever since its entry in Uganda, Dominion has been unfortunate, hitting only dry wells, including Ngaji-1 well in the Lake Edward basin

The company has carried out exploration in Kanungu and Rukungiri districts and has been having run-ins with MPs who accuse it of offering bribes and employing former foreign affairs minister Sam Kutesa’s daughter without following due process.

The company was, while appearing before the parliamentary ad hoc committee investigating the oil sector, accused of attempting to file for recoverable costs and failure to pay capital gains tax accrued upon being bought off by Ophir-energy.

That it has never hit oil in Uganda, the pull-out will mean that Uganda will not have to refund any money the oil company spent during its search for oil.

However, the Energy ministry is expected to communicate the full implications of the pull-out after studying what its agreement says on termination.

iimaka@ug.nationmedia.com

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