Uganda confirms more oil deposits

Tuesday September 18 2012



The country’s oil prospects are getting brighter after an additional one billion barrels of oil were recently announced as having been discovered, pushing the figures of commercially viable deposits to at least 3.5 billion barrels.

Energy ministry officials revealed the expanded find, which is a significant percentage increase in the proven deposits first announced in 2006. Mr Ernest Rubondo, the commissioner for Petroleum Exploration and Production, Ministry of Energy and Mineral resources, made the announcement last week at a conference organised by the Uganda National Chamber of Commerce.

“From about two or three wells we have increased our oil barrels to 3.5 billion,” Mr Rubondo said, answering a question on transparency. He further disclosed that out of 77 wells drilled so far, 70 have been proven to contain oil and gas. Uganda’s oil fields, he said, are showing a comparatively higher level of productivity when measured against the experience in other countries where the chances of oil discovery in an equal number of wells usually hovers at only 10 per cent.
“Thus far, $1.5 billion is the amount that has been spent in all the activities leading to the 3.5 billion barrels discovery,” Mr Rubondo said.

The even better news, according to the commissioner, is that exploration is still ongoing and more discoveries are expected along the way. Before the discovery of the additional one billion barrels, the country’s exploration efforts in the Albertine Graben shown estimated oil and gas reserves of 2.5b barrels. But, production has been delayed by contractual disagreements, tax disputes and infrastructural setbacks, according to the Energy ministry.

Parliament, which is investigating three ministers over allegations of accepting oil bribes, has also criticised the government for hiding information about the budding sector, amid suspicions of high level corruption.

Now, the oil companies invested in the sector, particularly Tullow Oil, want commercial exploitation to start immediately, saying it is unfair for them to hold their capital idle. At the same conference, Tullow Oil president in Uganda, Elly Karuhganga, said with neighbouring countries discovering oil in the region, investor attention could turn to them.

Mr Karuhanga advised that before this happens Uganda should allow the companies that have invested to start commercial production as exploration continues elsewhere. Block 1, found on the northern tip of Lake Albert, is operated by a local unit of France’s Total SA, while block 2 is operated by, Tullow Oil.

Total entered Uganda’s oil industry early this year after it signed onto a joint venture with CNOOC and took up a third each of British explorer Tullow Oil’s exploration assets in the country worth $2.9 billion.

According to Reuters, Total expects to drill a total of eight exploration wells in Uganda by the end of 2013, spending about $650 million on exploration and appraisal activity and seismic data acquisition.

Uganda is expected to conduct a licensing round for hundreds of square kilometres of exploration acreage after Parliament passes new oil laws expected by the end of this year. The government says only about 40 per cent of the Albertine Graben has been explored to-date and has stated it will be demanding tougher terms in new oil deals.