Kampala — Dominion Petroleum, the firm exploring oil and gas in south-western Uganda, has started drilling in Lake Edward.

The firm, in a statement issued on Tuesday, said the drilling started last week and is expected to be completed in July.

"We are pleased to announce that drilling has commenced on Ngaji," Andrew Cochran, the company chief, said.

"This is the first oil well to be drilled in Lake Edward and the data gathered will guide our future work in the area," he said.

The UK-listed company operating in Rukungiri and Kanungu districts believes that the well contains about 100 million barrels of oil.

The firm got the drilling permit from Uganda's department of petroleum exploration and production this week.

Drilling is taking place in exploration area Block 4B, which is owned by the firm.

Cochran said if the drilling yields good results, the firm will step up activities in its neighbouring Block V on the DRC side of Lake Edward.

"The findings will support an expanded exploration and appraisal drilling programme that will start early next year," Cochran disclosed.

The approval of the drilling permit has been an ongoing process.

In July 2007, Dominion made a production sharing agreement with Ugandan.

The agreements provided the firm with exploration rights at the block.

This agreement was extended by two years in August last year.

As a condition of the two-year extension, the company was obliged to drill at least one exploration well at the block. Failure to do so would have seen the firm's license revoked.