Oil Exploration Licences

Uganda is looking to go a step further in its oil exploration by oil exploration licences to four foreign companies by the end of the year.

A senior energy ministry official said on Wednesday that the country would give out oil exploration licences to companies it had invited for talks in its first licensing round.

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The round began in February of 2015 for six exploration blocks, covering a total of 3,000 square km. Bidding documents were handed to sixteen oil firms but only seven submitted bids before narrowing to a final four.

The oil exploration companies selected to negotiate production sharing agreements (PSAs) are Australia’s Armour Energy Ltd, Nigeria’s WalterSmithPetroman Oil Ltd, Oranto Petroleum International and Niger Delta Petroleum Resources.

The oil firms already operating in Uganda – Tullow Oil, Total and CNOOC did not participate in this bidding round.

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Njabire said:

“What is happening now is we are negotiating with four applicants and we expect to conclude the process and sign PSAs by the end of this year,” said Nurudin Njabire; a petroleum geologist at the directorate of petroleum at the Ministry of Energy and Mineral Development speaking at an East Africa oil and gas conference.

“We also expect that at the end of this month or early next month, FEED (Front-End Engineering Design) is going to start. We expect to work towards getting this oil pipeline by 2020.”

Uganda discovered crude oil in the country in the Albertine rift basin along Uganda’s border with the Democratic Republic of Congo in 2006. Estimates value the reserves at 6.5 billion barrels, with between 1.4 billion and 1.7 billion barrels recoverable.

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Earlier this year, Uganda announced that it would embark on building an oil pipeline export route through Tanzania rather than Kenya because it offered a cheaper and faster route.

Uganda is also looking to identify a lead investor for a refinery by the end of this year which the energy ministry estimates to cost about $4 billion.