The three major oil companies in Uganda - Tullow, CNOOC and Total - are studying options of potential routes of an export pipeline and the costs, even though government has not come up with a public statement to support such an option.
In the meantime, the Chinese firm CNOOC kicked off its drilling campaign by hitting a dry well. In its half-year statement released on Wednesday, Tullow Oil announced that the oil discovered in the Ngamia basin in Kenya, which has similar features to the oil found in Uganda, has reinforced the need for an export pipeline for the region, the strongest indication so far that Uganda's crude oil will be exported.
"The companies are currently studying the potential routes and design for an export pipeline, which is a critical element of the overall project," Tullow noted. The statement added: "The total cost of the pipeline is anticipated to be $2.5 billion to $5 billion, depending on the route, design and throughput. The implications of Tullow's Kenyan oil discovery are being considered as part of this work."
No commercial oil has been discovered in Kenya though, meaning that the companies' operations in Uganda are heavily influencing the plans for the pipeline. The oil companies' considerations touch on a debate that has long preoccupied the minds of the key players in the industry: whether Uganda should consider the option of exporting crude oil or not.
Government's position is that the option of exporting crude oil will only be considered only after the regional demand for petroleum products has been met. Different estimates indicate that East Africa consumes about 120,000 - 150,000 barrels of oil per day.
Uganda is expected to produce about 200,000 barrels of oil per day at peak. Up to 2.5bn barrels of oil have been discovered in Western Uganda so far, according to official figures, with production expected to start in three years at the earliest.
According to different government officials, exporting the oil is expensive - It will require generators to heat the pipeline in order to keep the oil flowing from Western Uganda throughout Kenya to the port of Mombasa - a more than 1,300km stretch.
Uganda's oil is waxy, which means that it solidifies quickly, and, therefore, needs to be heated in order to flow. Building a pipeline would also revive the messy issue of acquiring land and dealing with compensations over the evictions in two countries - a subject that has never been short on controversy.
It was largely on this basis that Uganda's government decided on the option of building a refinery, which would turn the country into a key supplier of petroleum products to the region.
Also, government argues that a refinery will be an offshoot to the petrochemical industry, where such products like bitumen for road works will be produced. The oil companies, on the other hand, think otherwise.
Their position is that the regional demand might not be sufficient to match the supply of petroleum products. That a country like Uganda should look at ways of exporting its oil as fast as possible while demand is still high so that the money generated can be invested in productive sectors like infrastructure to ramp up the economy.
Uganda remains a key area for Tullow. The oil firm noted that its balance sheet, in which it recorded a 63% jump in net profit, was "fundamentally transformed" by the Uganda farm-down.
Tullow completed the sale of two thirds of its interests in Uganda to China's CNOOC and France's Total in February this year for $2.9bn. Tullow says it gained $701m from this deal.
In June, Aidan Heavey, Tullow's Chief Executive Officer, made his first public appearance, and speech, in Uganda at a Tullow-sponsored cocktail for the Uganda Chamber of Mines and Petroleum, where, on the sidelines, he said Uganda was "first in the queue" of the areas the company intends to concentrate on.
The Chinese firm CNOOC kicked off its drilling campaign in Uganda by hitting a dry well in the Kanywataba prospect. CNOOC discovered that the well held water, and not oil.
It was the last well that CNOOC drilled before the exploration licence for the prospect expires next month. However, CNOOC still holds a production licence for the giant Kingfisher, which is estimated to hold up to 800 million barrels of oil.