Total E&P Uganda has temporarily suspended its operations in the northern district of Nwoya after a team that was conducting seismic surveys in the area found two unexploded ammunitions.
Total operates in Exploration Area 1 (EA1) that includes Nwoya district, Murchison Falls national park, and parts of Nebbi. Corporate Affairs Manager Ahlem Friga-Noy yesterday insisted that the suspension with immediate effect was precautionary.
"After the second discovery (of the ammunitions), Total E&P Uganda decided to suspend its 3D seismic activity to avoid putting its personnel and UWA rangers at risk," Friga-Noy told The Observer.
"Consequently, we decided to declare the force majeure on the 3D operations to give it the necessary time to assess the risk and to take appropriate measures."
Oil and gas contracts generally include a force majeure clause, which relieves the oil company from liability for breach, if its performance is impeded as a result of a natural cause that could not have been anticipated or prevented.
Total called in Geomines, an Israeli demining company, to assess the risks.
"I have spoken with the commander of the area who met a team from Total. He has assured me that the ammunitions were thoroughly dealt with," the Army spokesperson, Lt Col Paddy Ankunda, told Oil in Uganda.
CNOOC gets nod
But there were no such troubles for the China National Offshore Oil Corporation (Cnooc). On Wednesday, Cnooc received Uganda's first licence to produce oil from Kingfisher field in Hoima.
The state minister for Mineral Development, Peter Lokeris, presented the licence to Cnooc on behalf of government. According to the commissioner for Petroleum Exploration and Production, Ernest Rubondo, the first barrel of oil will be produced in 2017.
"We have planned this to coincide with the completion of the refinery; so, we can confidently say that somewhere in 2017, we will be an oil-producing country by then," Rubondo said, at the ministry offices in Kampala.
Under the licence, Cnooc will spend at least $2bn (Shs 5.2 trillion) to develop the oil field. The money will be spent on pre-development activities, including building the production infrastructure and land lease acquisition; construction of pipelines to the refinery in Kabaale; access roads, an airstrip, a permanent camp and development wells as well as an abandonment fund.
"Under the production sharing agreement, all this money is to be recovered from oil sales," Rubondo explained.
The Kingfisher field will be developed to produce up to 40,000 barrels per day. The field, discovered in 2006, is estimated to hold 635 million barrels of oil, of which 196 million are recoverable, representing a 30.9 per cent recovery rate. Officials say that the international average rate is lower than 30 per cent.
Tullow next in line
The Kingfisher field originally belonged to Tullow Oil, which acquired it from Heritage oil in 2010. However, in February 2012 Tullow farmed out its 33 per cent of its interests to Cnooc and Total each.
Rubondo said Tullow Oil had applied for three production licences, covering Mputa and Nzizi fields in Hoima, Kasamene and Wairindi oil fields, as well as for Ngoga, Ngara, Ngege and Kigogole oil fields - the latter two in Buliisa district.
Under the new Petroleum (Exploration, Production and Development) Act, the licence applications are supposed to be handled by the Energy minister in consultation with a Petroleum Authority.
However, in the absence of a yet-to-be-formed Authority, the Petroleum Exploration and Production department is still carrying out this task. Total E&P is understood to be finalizing its Field Development Reports for submission of application production licences for oil fields in Buliisa and Nwoya districts.