15 February 2013

Uganda: Nation Earns U.S.$2 Million From Oil in North

Uganda has earned $2m in bonus from the recent oil discoveries in block-I in Northern Uganda. The oil was discovered by TOTAL, a French oil firm licenced to operate in the exploration area.

"The discovery bonus is in relation to the discovery of Lyec field on December 31, December 2012," Fred Kabagambe-Kaliisa, the permanent secretary in the Ministry of Energy and Mineral Development, revealed.

He disclosed that the money has been deposited on the Government's consolidated fund account on Bank of Uganda.

Kabagambe-Kaliisa noted that in paying the discovery bonus, Total on behalf of its partners - CNOOC and Tullow - was fulfilling the provisions of the February 3, 2012 Production Sharing Agreement.

"This particular agreement required the companies to pay $2m bonus for each discovery made within the one year licence," he explained.

"The period of one year was in compensation for the exploration time, which was lost when negotiating Tullow's acquisition of Heritage's assets in the area," Kabagambe-Kaliisa said.

The Production Sharing Agreement was signed for Exploration Area 1A (Pakwach Basin) for a period of one year and Total was selected as an operator to undertake exploration in the 3058km2 area.

The discovery well Lyec-1, drilled to a total depth of 290m, encountered oil in a gross interval of 43m and net interval of 12m.

The Lyec discovery comes after the company drilled three dry wells in this exploration area.

A similar condition of payment of a $2m discovery bonus had also been agreed between the Government and the partners - CNOOC, TOTAL and Tullow - for the Kanywataba prospect license in the Semliki basin.

This licence, also signed on February 3, 2012, was for a period of six months. The Kanywataba-1 well, which was drilled on this prospect, did not find hydrocarbons and this payment was, therefore,

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