Kampala — The Government has rejected the suggestion that Libyan leader Col. Muammar Gadaffi is eying Uganda's oil.

"The Government of Uganda does not accept the view that Gadaffi is after Uganda's oil," said foreign affairs minister Sam Kutesa in a statement yesterday.

"In any case, Libya has more oil than Uganda will ever find. We, therefore, do not think that Libya is targeting Uganda's oil."

He was reacting to a Sunday Vision story entitled: 'Is Gadaffi after Uganda's oil?'

"Any misunderstanding the article may have caused between the two countries is unfortunate and we disassociate ourselves from it," Kutesa's statement said.

Citing the Italian media, the article said Libya at three occasions announced its interest to buy up to 10% of shares in Eni, the Italian company that wants to take over Heritage's stake in Uganda's oil fields.

That would make Libya the second biggest shareholder in the company, after the Italian state which has 30%. Already, Libya owns 2% of Eni.

Libyan state-owned company Tamoil earlier won the contract to build the Kampala oil terminal and the extension of the Eldoret-Kampala oil pipeline.