Kampala — Oil prospector Tullow Oil has said it is currently working to find out the quantity and quality of the oil so far discovered before a decision is made on whether to build a multi-billion dollar refinery.

At the moment, the Uganda government and Tullow Oil have an agreement in place for the Ireland-based firm to build a mini refinery in an early production scheme that will enable installation of a 100MW heavy fuel oil thermal power plant.

"We are trying to understand how much oil there is, the type of oil and what we will do with it. All those factors will play a decisive role in Tullow investing in a refinery," Mr. Paul McDade, Tullow's chief operations officer said recently.

The mini refinery (with a capacity of about 5,000 barrels of oil per day) will cost Tullow some US$200 million while a refinery with a big capacity would cost about $2 billion.

McDade also revealed that Tullow is working on inventorising the Albertine Graben with the possibility of extending the proposed Eldoret-Kampala pipeline to Lake Albert, where the oil has been discovered.

Uganda's energy and mineral development minister Daudi Migereko said plans to re-design the pipeline as well as expand its capacity have been brought to the table.

If significant amounts of oil exist in the Albertine Graben as indeed initial results have shown, Migereko said the pipeline would be extended and fitted with the capacity to reverse-pump the fuel to serve East Africa markets.

Should the idea of a refinery anywhere in Uganda be dropped, the expanded pipeline (1,300 km) will be fitted with capacity to heat the pipeline, given that the oil so far discovered is waxy.

East Africa imports $2.5 billion of petroleum products annually but the import bill should come down when commercial oil production starts in about 2015.

Migereko and McDade were speaking a week ago at the Commonwealth Business Forum (CBF) on the topic, 'Oil, Gas & Alternative energy: opportunities and challenges'.

What is even more interesting as far as Uganda's oil exploration efforts go is the fact that four other exploration blocks are yet to be licensed to prospectors who are constantly knocking on the ministry's door.

Altogether, there are nine exploration blocks with five of them already licensed to four companies; Heritage Oil, Tullow Oil, Tower Resources and Dominion Oil.

Migereko said the unlicensed acreage, which totals 1,786 Sq kms, will be licensed next year through competitive bidding when the oil and gas policy, which is still in the works gets finished.

Migereko said that once all the nine blocks are opened up to exploration, government will be in position to offer higher figures in respect to its oil and gas sector.

Having discontinued licensing of new explorers, Migereko said government is now faced with an avalanche of applications. "There is an influx of companies demanding exploration licenses," he said. Since 2006, Tullow Oil and Heritage Oil Corp, the two companies that discovered oil in the Albertine Graben, have drilled about three substantive wells -Waraga-1, Mputa-1, Nzizi-2 and Kingfisher-1, which have shown a combined output potential of more than 30,000 barrels of oil per day.

Early in the year, President Yoweri Museveni said that the discovery of oil and gas had opened up significant opportunities in the nascent sector.

Migereko was quick to reiterate the president's words, telling the delegates that other opportunities would come in 2009 when the early production scheme for the 100MW thermal plant starts.

The scheme will involve construction of a mini refinery with a capacity to process between 4,000 to 5,000 bopd.

Areas given very good flow rates demonstrating good movement of oil in these areas.