Shs3.6b spent on oil & gas discovery, says ministry

He does not, however, reveal what percentage the oil companies had signed to in the Production Sharing Agreement that has remained a secret.

The government and oil exploration companies have spent more than $1.5 billion (about Shs3.6 trillion) to find oil.

Mr Earnest Rubondo, the commissioner for Petroleum Exploration and Production, in an interview said the findings may be within the international rates as well as what the oil companies agreed to in the Production Sharing Agreements.

Although he does not say how they arrived at this figure, Mr Rubondo argues that the government’s expectation is that oil can be produced at less than $15 per barrel.

He does not, however, reveal what percentage the oil companies had signed to in the Production Sharing Agreement that has remained a secret.
The costs relate to several activities involved in the exploration and actual drilling of oil wells, including some of the social corporate responsibilities by oil companies. The costs mainly footed by oil companies have to be recovered when actual production starts under the agreements.

Fears and doubts
The question of how much has been invested in the oil finding process is one of the major issues that have not been answered as the search process moves towards the production stage.

Some civil society groups have expressed fear that the costs could be exaggerated, especially by oil companies expecting to recover their money once actual production begins.

“The finding cost in Uganda is less than half a dollar a day per barrel. This is very good for Uganda because around the world, the cost for oil is currently between $5 to $25 per barrel,” said Mr Rubondo.
Dr Emmanuel Kiiza Aliba, a former prime minister in Bunyoro Kingdom, says some of the money may have been spent on activities that did not add value to the economy.

Former Finance minister Ezra Suruma is one of the Ugandans saying the lack of technical capacity would put Uganda at a disadvantage when determining such costs and other matters relating to the oil and gas sector.

Currently, individual staff from the Petroleum Exploration and Production Department are deployed at the oil fields to monitor compliance measures.
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