Ibrahim Kasita
1 July 2009
Kampala — Tullow Oil, the biggest oil exploration company in Uganda, has said it is ready to open its books once the legislation on oil contracts is in place in Uganda.
"We signed a non-disclosure agreement with the Government. As a contractor, we are not allowed to provide any information regarding this agreement," said Brian Glover, Tullow's business unit manager, in an exclusive interview with Business Vision.
"Since no legislation has been enacted yet, many components have not been finalised. If this is done, information will be available."
Glover stressed that Tullow Oil very much believes in transparency. "We see no benefit in hiding things. Even in Uganda, we are always keen to have people visit our operations," he said.
Asked if the company would work in countries like Sudan where oil money is suspected of fuelling the war, he said: "There are certain countries we could not work in because of human rights issues and environmental concerns."
Providing a rare insight in the oil discovery in Uganda, Glover said so far 700 million barrels have been confirmed but the total could reach well over 1 billion barrels since only 30% of the exploration programme has been completed.
"We are advantaged here since we discovered oil in 23 out of 24 wells. This is unprecedented. Normally, only 20 to 25% of the places we drill in the world have oil."
He said what has been discovered so far guarantees oil production in the order of 150,000 barrels a day over a period of up to 25 years. "In terms of comparison, I would put Uganda in the top 50 of oil producers in the world."
All the 23 oil wells are located on the mainland in Uganda, he emphasized. But Tullow expects a lot more oil to be found underneath Lake Albert, which is shared with the Democratic Republic of Congo.
It is currently drilling its first well (Ngassa-2) from the Ugandan shore horizontally into the lake, 4,000 metres deep.
Glover is hopeful that they will soon conclude an agreement with the DRC on oil exploration at the Congolese side of the lake.
"They have given us an indication that we will be allowed to operate on the other side," he said.
The oil found in Uganda, though from good quality, is waxy in nature, meaning it needs a specific kind of refinery to break it down into diesel or kerosene, according to the Tullow director. It would also make it difficult to pump it to the coast since the pipeline would need to be heated to get it over mountains like Mount Elgon.
Glover recommends the option of refining the oil in Uganda rather than exporting crude oil but warns that building a refinery needed for the Ugandan type of oil could take up to five years and cost a lot of money.
On the delays in the production of heavy-fuel oil for power generation, Glover noted that there had been a lot of discussion on where to build the early production system since the Mputa oil fields were considered too small.
"We finally found a location outside the Kabwoya Game Reserve. Another reason for the delay is that we found a lot of oil elsewhere. With the discovery of more oil, we have more options to choose from."
Asked why the oil in Uganda was found so late, he said when it was first discovered by Shell in the 1930s, it was considered not significant.
"They were looking for significant finds such as in Nigeria and Saudi-Arabia. But the world has moved on. Now is the time when oil has become scarce and the prices have gone up. So countries like Uganda come into consideration."
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