14 May 2019

Uganda: Will Rising Prices Spur Interest in Uganda's Oil?

Uganda is optimistic that the rising global oil prices will attract large companies in the industry to the country. The government has announced the second licensing round that will see five exploration blocks open for bidding.

Energy Minister Irene Muloni launched Uganda's second licensing round at the East African Petroleum Conference and Exhibition (EAPCE) in Mombasa last Wednesday.

"It is exciting that we have more ground for exploration. As a country, it means more revenue for development," she said.

Uganda has 6.5 billion barrels of oil, of which an estimated 1.4 to 1.7 billion barrels are recoverable.

Despite this potential, save for the three companies that hold production licences, the country's oil has not attracted the big names in the business.

Robert Kasande, Permanent Secretary in the Ministry of Energy, told The EastAfrican that the government hopes that the current global oil price - currently at around the $70 mark per barrel for the Opec basket - should interest large firms.

At Uganda's first competitive licencing round in 2017, 17 small oil companies put in bids with only two being picked -- Nigeria's Oranto Petroleum, which took the Ngassa oil block, and Australia's Armour Energy Ltd, which was awarded the licence for the Kanywataba Block.

"My hope is that this time we get more companies than last time. The oil price at that time was less than $40 per barrel and not attractive for most players. Now we think there will be more interest because of the over-$70 price," Mr Kasande said.

Data

Speaking ahead of the Mombasa conference, he said that data for all the five oil blocks on offer was ready.

The blocks are located off- and onshore Lake Albert. They include Kasuruban in the south of Buliisa District, which already has oil wells operated by Tullow Oil, Turaco in the Semliki area, and Ngaji in Kanungu district.

The other oil blocks on offer are Avivi and Omuka in Yumbe/Moyo districts.

Officials say the five exploration blocks range from 400 to 1,300 square kilometres, on which extensive data -- including seismic and well data -- is available.

"When we announce the licensing round, we are telling the global oil exploration community that our database is open. The actual bidding may take place next year. It takes time for interested companies to interpret and process the data," Mr Kasande said.

The ecosystem of some of the oil blocks also poses a challenge for exploration companies. For example, Ngaji block was earlier removed from the fields on offer because the block covers half of Lake Edward and is part of the protected Queen Elizabeth National Park.

Ngagi is also in the same ecosystem as the Virunga National Park -- Africa's oldest game park and a Unesco World Heritage Site.

Uganda made its first commercial oil discovery in 2006 in the Albertine Graben, and to date over 121 wells have been drilled with a success rate of over 88 per cent.

These discoveries, which include some 500,000 cubic feet of gas, cover only 40 per cent of the Albertine Graben, with the rest of the region yet to be explored.

"Out of 121 wells drilled, 106 had hydrocarbons," Junior Minister for Minerals Peter Lokeris told an earlier oil conference.

Uganda

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